Denver Water proudly serves
high-quality water and promotes its efficient use to 1.3 million
people in the city of Denver and many surrounding suburbs.
Established in 1918, the utility is a public agency funded by water
rates and new tap fees, not taxes. It is Colorado's oldest and
largest water utility.
DENVER WATER
2010 BUDGET
Introduction
• Pages 1-12
About Denver Water
• Pages 13-18
Organization
• Pages 19-39
Strategic Overview
• Pages 40-49
Budget Summary
• Pages 50-54
Sources of Funds
• Pages 55-63
Uses of Funds
• Pages 64-80
Glossary
• Pages 81-94
Appendix•Debt Guidelines
•Financial Policy
Page 1
To Our Customers and Other Interested Readers:
Denver Water's 2010 budget and 2009 operations attest
to our commitment to provide our customers with water
and service of the highest quality. This commitment
includes an obligation to provide adequate supplies of
high-quality water now and in the future, a responsibility
to protect the utility's assets and expand them as needed,
and a desire to enhance communication with customers
and help them use water as wisely as possible.
Two of Denver Water's major accomplishments in 2009
involved using technology to improve our ability to
communicate with customers. First, our new Customer
Information System (CIS) went on line in July, enabling us to bill customers every month, as
opposed to every other month. Giving customers more frequent feedback about the amount of
water they use helps them monitor and adjust their water use habits in a timelier manner. In
addition, the new CIS boosts our ability to track customer account information, analyze water
savings, and administer more sophisticated rate designs.
Also in July we unveiled our revamped Web site at denverwater.org. The newly designed site
provides easy-to-access information on topics ranging from billing and rates, conservation, and
water quality to recreation, construction projects, and consumer education. A conservation link,
for example, offers tips on efficient water use, plus information about rebates, incentive
programs, and water use rules. A water service and support link contains advice for
troubleshooting water service problems and phone numbers for requesting help. Customers can
also use the site to manage their accounts, pay their water bills, or sign up for an Automatic
Payment Plan.
We also made progress in our efforts to ensure that the water system—the collection, treatment,
distribution, and recycling systems—can continue to provide an adequate supply of water for our
expanding customer base. Planning projections indicate that, without preventive measures,
Denver Water will experience a water supply shortage of 34,000 acre-feet by 2030. (An acre-foot,
or 325,851 gallons, is enough to cover Invesco Field at Mile High with a foot of water; it is also
enough to serve roughly 2.5 households for a year). To make sure our supplies keep up with
demand, we are pursuing a multifaceted strategy—expanding storage capacity in the Moffat
Collection System at the north end of the water system, expanding our recycled water system,
and saving water through conservation.
[ ]
Our new denverwater.org site provides easy-to-access information on topics ranging from billing and rates, conservation, and water
quality to recreation, construction projects, and consumer education.
The new CIS boosts our ability to track customer account information, analyze water
savings, and administer more sophisticated rate designs.
Page 2
The Moffat System currently provides approximately 10 percent of Denver Water's supply and is
at risk of running out of water in a single dry year. To achieve a better balance between our
collection systems, the Board has recommended enlarging Gross Reservoir, Moffat's primary
storage facility. Adding storage capacity in this reservoir will help address the projected supply
shortage, assist us in dealing with future droughts, and serve as a safety net if the south end of
the water system faces unexpected challenges such as those caused by recent wildfires in our
watersheds.
The plan to raise the reservoir's dam by 125 feet will provide an additional 18,000 acre-feet of
water, enough to serve roughly 45,000 households every year. Because the reservoir was
originally designed to be this larger size, ancillary facilities such as the Moffat Tunnel and South
Boulder Canal will not have to be modified, and no additional water rights will be needed.
In October 2009, the U.S. Army Corps of Engineers released a Draft Environmental Impact
Statement (EIS) describing the potential environmental effects of the proposed project. The
public comment period for the Draft EIS ends March 1, 2010. Prior to the draft document's
release, Denver Water assisted the Corps in responding to comments from the U.S.
Environmental Protection Agency, the Federal Energy Regulatory Commission (FERC), and
officials in Grand County. We also developed a mitigation plan with input from the
environmental community and obtained a Final Biological Opinion from the U.S. Fish and
Wildlife Service.
Denver Water aims to acquire the remaining 16,000 acre-feet of needed supply through
conservation measures, with the goal of reducing average per capita water use to 165 gallons per
day by 2016. Thanks to customers' altered water use habits during the dry years of 2002–2004
and their response to an accelerated program of water efficiency measures launched in 2007, we
are well on our way to achieving this goal.
Numerous conservation measures supported customers in attaining water savings. They
included educational programs such as water use audits and the "Use Only What You Need"
advertising campaign, rebates on the cost of water-efficient appliances and irrigation equipment,
and financial incentives for efficient use by large-volume water users such as commercial and
industrial customers and homeowner associations that irrigate large tracts of land.
By the end of 2009, Denver Water had issued almost $1.8 million in rebates to residential
customers who replaced water-guzzling household plumbing fixtures and appliances with water-
efficient models. Rebates for low-water-use clothes washers and high-efficiency toilets accounted
for 97 percent of these payments. Staff estimates that installation of these water efficient
fixtures and appliances will save almost 400 acre-feet of water per year.
Our commercial and industrial customers earned rebates of more than $300,000 through the end
of 2009. Payments for the installation of high-efficiency toilets and submeters represented 60
percent of this total. The 30 businesses and homeowners associations currently participating in
our irrigation efficiency contracts received $7,000 for each acre-foot of water they saved during
2009.
Denver Water aims to acquire the remaining 16,000 acre-feet of needed supply through conservation measures, with the goal of reducing average
per capita water use to 165 gallons per day by 2016.
Page 3
For the third consecutive year, we partnered with the Mile High Youth Corps to retrofit low-
income households and nonprofit facilities with water-efficient toilets, showerheads, and faucet
aerators. Since this program began in 2007, we have extended its area of operation from the City
and County of Denver to other locations in our combined service area. We have also increased
the number of retrofits each year—854 high-efficiency toilets were installed in 2007, 1,500 in
2008, and more than 2,000 in 2009.
Our water use enforcement program helps customers comply with Denver Water's operating
rules such as refraining from lawn-watering between 10 A.M. and 6 P.M., amending soil before
installing turf and other plants at new tap sites, and abiding by the water budgets established
for lawns larger than one acre. From May through September 2009, 12 temporary workers
patrolled Denver Water's service area, monitoring water use and talking with more than 3,000
customers about observed or reported water waste.
Denver Water's Recycled Water System also helps to stretch Colorado's limited water supplies.
The system currently treats and distributes approximately 2.3 billion gallons of recycled water
for irrigation and certain industrial purposes. In July and August 2009, four northeast Denver
parks—Crescent, Denison, McNichols, and Verbena—were added to the recycled water
distribution system. With these additions, the system now supplies irrigation water to 15 parks,
three schools, three golf courses, and the Denver Zoo.
In addition to providing adequate supplies, our commitment to customers includes ensuring the
water system's reliability. This involves making certain that existing facilities such as reservoirs,
treatment plants, and distribution mains function optimally and that new facilities are added as
necessary.
As part of an ongoing program to protect the integrity of our potable water distribution system,
we cleaned and lined more than 20,000 linear feet of unlined cast iron water mains in 2009 and
replaced another 240 feet of distribution pipe. In May we began a three-year, multimillion-dollar
project to overhaul a 1960s-era filtration system at the Marston Treatment Plant. We cooperated
with stakeholders in Summit County to complete a vulnerability assessment for the dam at
Dillon Reservoir and to develop security measures related to the road traversing the dam.
Careful planning and management of capital projects constitute a vital part of ensuring water
system reliability. In 2009, our Capital Program Review (CPR) Committee instituted a new
review process to make sure Denver Water's 10-year Capital Improvement Plan is implemented
on schedule. The committee consists of the directors of four Denver Water divisions—
Engineering, Operations & Maintenance, Finance, and Planning.
The new review process delineates stringent procedures that must be followed before project
priorities can be shifted or resources diverted from those designated in the capital plan. Another
directive specifies that the increased workload dictated by the capital program requires staff to
spend more time managing rather than performing tasks related to capital projects. Needed skill
sets generally will be augmented by contracting with outside resources rather than adding
permanent staff positions.
For the third consecutive year, we partnered with the Mile High Youth Corps to retrofit low-income households and nonprofit facilities with water-efficient
toilets, showerheads, and faucet aerators.
Page 4
In September, the CPR Committee began holding monthly meetings with the project managers
of Denver Water's 25 largest capital projects. These meetings provide a forum for coordinating
project status and budget issues and making certain that project managers have the resources
they need to complete projects on time and within budget. The meetings also help project
managers understand how their projects fit into the bigger picture and how changes in one
project's schedule can affect the implementation of others. Discussions typically include topics
such as changes in scope-of-work, staffing needs, permitting, major hurdles, and milestones.
To help fund its capital projects, Denver Water became the first agency in Colorado to issue
Build America Bonds, a new financing tool for state and local governments created by the
American Recovery and Reinvestment Act of 2009. Unlike the tax-exempt bonds traditionally
issued by government agencies, Build America Bonds are taxable, but they come with a 35
percent federal subsidy on interest costs. In May 2009, Denver Water issued $44 million of Build
America Bonds at an interest rate of just over 6 percent. With the federal tax subsidy, however,
Denver Water actually will pay only 3.94 percent, a lower interest rate than the 4.23 percent
average rate it pays on its currently outstanding tax-exempt bonds.
Our most significant plans for continuing to provide adequate high-quality water supplies and
reliable service are described in the following section, which summarizes Denver Water's 2010
goals and objectives.
2010 Goals and Objectives
Complete Denver Water's New Integrated Resources Plan
Long-term planning has been a consistent element in Denver Water's ability to meet customer
needs in this fast-growing, semi-arid region. Many aspects of the water system that customers
rely on today were planned decades ago.
In 2008, the staff and Board began updating Denver Water's Integrated Resource Plan (IRP), a
comprehensive plan that will guide decisions related to the water system over the next 40 years.
This long-range planning effort continued throughout 2009, and publication of the completed
plan is slated for late 2010.
Provisions of the new IRP will establish the level of service Denver Water intends to provide to
customers, scrutinize water-demand projections and demand-management alternatives, and
identify water efficiency opportunities and new facility needs. It will also examine potential
challenges to the water system—for example, climate change effects, more severe and frequent
droughts, changes in demographics and water use patterns, watershed alterations such as those
caused by beetle kill and forest fires, Colorado River water shortages, and economic and
regulatory changes. In addition, the IRP will clarify the Board's goals regarding system
reliability, strategic water reserves, and Denver Water's role in regional and statewide water
activities.
The updated IRP will address future supply uncertainties by planning for a range of alternative
outcomes, rather than taking the more traditional approach of projecting a single outcome and
planning for that. A sophisticated new demand model enhances our understanding of the key
Many aspects of the water system that customers rely on today were planned decades ago.
Page 5
determinants of water use and thus helps us better prepare for a variety of changing demand
patterns. The final plan will include strategies for implementing and paying for each alternative
outcome, and it will examine three types of costs related to these strategies—financial,
environmental, and social.
The task of developing the new IRP involves Board members and staff members working on five
teams and contributing expertise from various functional groups, including Finance,
Engineering, Operations and Maintenance, Legal, and Public Affairs. The plan will also reflect
input from customers, the Citizens Advisory Committee, Denver Water's distributors, public
entities, environmental and other special-interest groups, neighboring Front Range utilities, and
industry experts.
Secure Approvals to Enlarge Gross Reservoir
After reviewing public comments on the draft EIS for the proposed project to enlarge Gross
Reservoir, the U.S. Army Corps of Engineers will complete a Final EIS and issue a Record of
Decision. Denver Water will assist the Corps in responding to the public's comments and will
finalize its mitigation plan and associated agreements with stakeholders. Once the Corps has
issued a Record of Decision and a permit, Denver Water will proceed with finalizing its
application for an amendment to the Gross Reservoir FERC license. Though some preliminary
design work was required for an adequate description of the proposed project, the permit from
the Corps, the FERC amendment, and several other permits are needed before the project's
design can be completed and construction can begin.
Ensure Successful Implementation the Board's 10-Year Capital Plan
As part of Denver Water's $1.3 billion 10-year Capital Improvement Plan, the Board has
approved a $94.1 million capital plan for 2010. Dam upgrades at two of our reservoirs—
Cheesman and Williams Fork—account for $24.6 million, or 26 percent of the 2010 capital
budget. All together, the 2010 capital plan covers 183 projects. In addition, the 10-year plan
directs staff to accelerate its pipe rehabilitation and replacement program by 10 percent each
year.
Launch a Project to Dredge Sediment From Strontia Springs Reservoir
The 1996 Buffalo Creek Fire and the 2002 Hayman Fire destroyed much of the vegetation in the
watershed surrounding Cheesman and Strontia Springs reservoirs. Subsequent erosion has
resulted in huge volumes of sediment and debris being deposited in these two reservoirs, causing
Strontia Springs to lose 8 to 10 percent of its storage capacity. To regain this lost capacity,
Denver Water will launch a two-year, $26 million dredging operation at Strontia Springs in mid-
to late 2010. Sediment removed from the reservoir will be piped to Denver Water's Kassler
facility, a no-longer-operational, nineteenth-century sand filtration plant more than six miles
downstream. The dredging project, delayed because of a Board directive to reduce operating
expenses in 2009, represents Denver Water's single largest operating expense over the current
10-year planning horizon.
An updated demand model helps us better prepare for a variety of changing demand patterns.
Page 6
Continue to Monitor Effects of the Economy, Weather, and Conservation Measures
on Customer Water Use and Denver Water's Finances
Uncertainties about the economy, climate change, and the long-term impact of Denver Water's
conservation programs make predicting future water demand a challenging task. Staff will
monitor these variables continually and make adjustments if revenues end up being less than
expected.
Recognizing that other water utilities face similar challenges, staff members will also continue to
consult with their peers in the industry and in the region in 2010 to exchange information
related to planning for an uncertain future.
Ensure a Smooth Transition in Denver Water's Leadership
My pending retirement in the late spring or early summer of 2010 means that Denver Water
must find a new general manager. I have offered to continue serving as manager until my
successor takes over, but the exact date of the transition depends on the timing of the Board's
decision and the new leader's availability.
In its first step toward selecting a new manager, the Board hired a consultant to interview
employees, distributors, and Citizens Advisory Committee members in order to identify the
primary responsibilities of the manager's position and to determine the critical characteristics
and skills a new leader should bring to the job. One result of this analysis was the determination
that the manager's position should be defined more clearly as a chief executive officer (CEO).
Because of requirements in Denver Water's charter, the position will now be referred to in legal
documents as the Manager, serving as CEO.
A detailed list of job responsibilities and qualifications was posted at denverwater.org in January
2010, along with instructions for potential applicants. No other organizational changes are
anticipated at this time.
2010 Budget
Sources of Funds
The 2010 budget for Water Sales is $223.3 million. This figure is based on a treated water
demand forecast that is 5 percent less than the projection used in August to develop 2010 water
rates. We have also used a very conservative estimate to project 2010 System Development
Charges (SDCs). Based on the continued downturn in the housing market, we estimate that SDC
collections will be only 37 percent of the amount we would expect in a normal year.
The remaining revenue categories are generally comparable to those in 2009, with the exception
of participation receipts. Two entities—South Adams County Water and Sanitation District and
Farmers Reservoir and Irrigation Company—made one-time payments to Denver Water in 2009
for their share of the purchase price for Lupton Lakes Gravel Pit. These payments totaled $10.3
million. In 2010, the Participation Budget will return to a more normal year of $4.8 million.
Uncertainties about the economy, climate change, and the long-term impact of Denver Water's conservation programs make predicting future water demand a challenging task.
Page 7
Denver Water has projected the issuance of $39.0 million in Revenue Bonds in 2010. As always,
the staff and Board will monitor market conditions and capital projects to determine the most
advantageous timing and amount for the bond issue.
Uses of Funds
Total 2010 Payroll Expenditures—including regular wages, paid leaves of absence, and overtime
and disability payments—are projected at $75.1 million. In recognition of the current economic
situation and in an effort to keep costs as low as possible, staff recommended, and the Board
approved, no market adjustment to employee wages in 2010.
Of the total amount budgeted for payroll expenditures, 11 percent will be assigned to staff
working with capital projects and 89 percent will be allocated to employees engaged in other
utility activities. The 2010 capital allocation is slightly lower than our historical figure.
Operations and Maintenance (O&M) Costs for 2010 are budgeted at $193.9 million, 18.6 percent
more than the amount budgeted in 2009. The principal driver of this increase is the beginning of
a multi-year project to regain lost capacity in Strontia Springs Reservoir by dredging sediment
from the bottom and pumping it down Waterton Canyon to the old Kassler facility.
The 2010 budget for conservation programs reflects the Board's continuing commitment to
accelerate water savings throughout Denver Water's combined service area. The total
Conservation Budget for 2010 is $11.4 million, an increase of 18.4 percent compared with the
2009 budget.
For the first time since the Board implemented a change in the design of the Employee Health
Care Insurance program in 2007, the Board's share of health care insurance costs rose in 2009.
As a result, the Board has implemented new changes designed to shift more of the burden of
health care costs to employees in 2010. Despite higher premiums and the change in plan design,
the 2010 budget for employee and retiree health care insurance is $13.0 million, 7.4 percent
higher than the amount budgeted in 2009.
Spending on Capital Projects in 2010 is budgeted at $94.1 million. The 2010 Capital
Improvement Plan calls for work on 183 projects. The four largest projects have a combined
annual budget of $36.1 million and comprise 38.4 percent of the 2010 capital budget.
Debt service and related costs are budgeted at $50.5 million.
Investment Balance
Based on projected 2010 receipts and uses of funds, we estimate that Denver Water's Investment
Balance, or cash reserves, will decrease by $47.2 million to $146.8 million by the end of 2010.
Denver Water has projected the issuance of $39.0 million in Revenue Bonds in 2010.
Page 8
2009 Budget Performance
Sources of Funds
Total sources of funds for 2009 were budgeted at $296.3 million. We ended 2009 with $270.5
million in receipts, $25.3 million less than the budgeted amount. The decrease was primarily the
result of reduced revenues from water sales.
Water Sales for 2009 were originally forecast at $224.0 million but subsequently budgeted at the
reduced amount of $212.0 million in anticipation of the economy's impact on demand. In fact, the
economy, the unusually wet summer, and our customers' conservation efforts resulted in water
sales revenue that was $23.7 million (11.2 percent) below the budgeted amount of $212 million.
In contrast to the decreased revenue from water sales, the wet weather enabled us to release
more water over our dams, generating 49.7 percent more Hydropower Revenue than projected for
the year. Interest Income also slightly surpassed the budgeted amount in 2009.
We also managed to exceed our conservative estimate for receipts from System Development
Charges (SDCs) in 2009. Total SDC receipts were $9.0 million, or 12.7 percent, more than the
budgeted amount. Still, total SDC collections in 2009 were significantly lower than the
approximately $22.0 million we would expect in a normal year.
Uses of Funds
Capital Spending in 2009 totaled $69.1million, $26.2 million less than the budgeted amount.
Most of this variance was caused by unforeseen delays in our two largest capital projects—
installation of new inlet controls at Cheesman Dam and a new hydropower facility at Williams
Fork Reservoir. Both of these projects are currently underway, and we are working hard to keep
them on track in 2010.
Operating Expenses in 2009 were $168.6 million, 3.1 percent over the budgeted amount. The
extra expenditures resulted primarily from higher-than-expected costs for employee and retiree
health care insurance ($2.3 million) and the unanticipated emergency repairs at Foothills Water
Treatment Plant ($0.7 million).
Debt Service payments for 2009 totaled $50.8 million.
Investment Balance
Denver Water ended the year with an Investment Balance of $194.0 million, which is $10.2
million more than the budgeted amount in 2009.
In contrast to the decreased revenue from water sales, the wet weather enabled us to release more water over our dams, generating
49.7 percent more Hydropower Revenue than projected for the year.
Page 9
Financial Overview
Denver Water's strong financial status is projected to continue during the current 10-year
planning horizon. Ratings of our revenue bonds by Moody's, Fitch Ratings, and Standard &
Poor's are Aa2, AA+, and AAA, respectively. We will continue to monitor water rates, capital
expenditures, debt levels, and investment balances to minimize rate increases while providing
reliable service to customers and maintaining Denver Water's financial well-being.
I am confident that the 2010 budget provides a responsible plan for both fiscal and physical
operations and is sufficiently conservative to enable us to adapt to changes in the economy
during the coming year.
Page 10
Board of Water Commissioners
Penfield Tate III, President, Appointed October 2005
Penfield Tate III is a former state legislator and a shareholder in the
Public Finance Group at the law firm of Greenberg Traurig. He is a
graduate of Colorado State University and Antioch School of Law. He
has served on the boards for the Colorado Bar Association, State of
Colorado Banking Board, Cerebral Palsy of Colorado, Colorado Housing
and Finance Authority, Five Points Community Center, and
Metropolitan State College of Denver Foundation. He has been the
executive director of the Colorado Department of Administration, an
aide to former Denver Mayor Federico Peña, and a trade regulation
attorney for the Federal Trade Commission.
John Lucero, First Vice President, Appointed September 2007
John Lucero is a broker associate at Lucero Real Estate, Inc., a local
real estate company that offers residential, commercial, development
and investment real estate expertise. He also is a former director of
the Denver Board of Realtors, where he received the 2007 President’s
Distinguished Service Award and has been a member of numerous
committees. Lucero also has served on several committees for the
Colorado Association of Realtors and the Colorado Association of
Hispanic Real Estate Professionals. He currently serves as a member
of the Denver Zoning Code Task Force and was a member of the
mayor’s transition team for Community Planning and Development in
2003.
Thomas A. Gougeon, Vice President, Appointed August 2004
Tom Gougeon is a principal in Continuum Partners LLC, a Colorado-
based development company known for mixed use and transit
oriented ―green‖ building projects. He served as chief executive officer
of the Stapleton Redevelopment Foundation, assistant to the mayor of
Denver, executive director of a charitable foundation, and was a
research associate at the Denver Research Institute in community
planning and natural resource economics.
Gougeon also worked at the U.S. Environmental Protection Agency,
where he worked on the Clean Air Act, western energy development
and public lands issues. He is a former chair of the Nature
Conservancy of Colorado and Volunteers for Outdoor Colorado, and he has served on the board of
the Denver Urban Renewal Authority and many other community organizations. He holds a
bachelor’s degree in economics from the University of Denver and a master’s degree in city and
regional planning from Harvard University.
Page 11
Paula Herzmark, Vice President, Appointed April 2009
Paula Herzmark is the executive director of the Denver Health
Foundation, a nonprofit organization that supports Denver Health. She
previously worked as the chief executive officer of the Robert E. Loup
Jewish Community Center, as well as the president and chief executive
officer of Prime Time Cable Corp., a private cable television company.
She also served in Gov. Richard Lamm’s cabinet as the executive
director of the Colorado Department of Local Affairs for five years, after
having served as the governor’s legislative liaison.
Herzmark has been active in several boards in the community, including
Opera Colorado, Stapleton Foundation, Denver Judicial Nominating Commission, Rocky
Mountain Planned Parenthood, National Jewish Hospital, the Denver Health and Hospitals and
the Downtown Denver Partnership.
Greg Austin, Vice President, Appointed: July 2009
Greg Austin is a former partner in the Denver law firm Holland & Hart
LLP. He retired from the partnership in 2001 but continued serving as
counsel to the firm until July 2009. Austin left Holland & Hart from
1973 to 1977 to serve as general counsel to the U.S. Small Business
Administration, and later as solicitor (general counsel) of the U.S.
Department of the Interior. Austin serves on the board of directors of
Craig Hospital, Rocky Mountain Public Broadcasting System, the
Denver Police Foundation and the Holland & Hart Foundation. He also
is a member of the Secretary of State’s Advisory Committee and has
served on the Colorado State Treasurer’s Advisory Commission.
LAST 20 COMMISSIONERS
Charles G. Jordan 1983 to 1985 Ronald L. Lehr 1993 to 1999
D. Dale Shaffer 1978 to 1985 Joe Shoemaker 1995 to 2001
John A. Yelenick 1969 to 1987 Andrew D. Wallach 2001 to 2003
Marguerite S. Pugsley 1978 to 1987 Daniel E. Muse 2000 to 2003
Elizabeth Hennessey 1985 to 1989 Richard A. Kirk 1993 to 2005
Malcolm M. Murray 1987 to 1993 William R. Roberts 1997 to 2005
Donald L. Kortz 1987 to 1993 Denise S. Maes 1995 to 2007
Monte Pascoe 1983 to 1995 Harris D. Sherman 2005 to 2007
Romaine Pacheco 1989 to 1995 Susan Daggett 2007 to 2009
Hubert A. Farbes, Jr. 1985 to 1997 George Beardsley 2004 to 2009
Page 12
Contact Us
Denver Water
1600 W 12th Avenue
Denver, Colorado 80204-3412
H.J. ―Chips‖ Barry, 303.628.6500
Manager
Marie L. Bassett, 303.628.6656
Director of Public Affairs
Christopher R. Dermody, 303.628.6262
Director of Information Technology
Carla Elam Floyd 303.628.6234
Director of Human Resources
Brian D. Good, 303.628.6503
Director of Operations and Maintenance
David B. LaFrance, 303.628.6411
Director of Finance
David L. Little, 303.628.6533
Director of Planning
Robert J. Mahoney, 303.628.6611
Director of Engineering
Patricia L. Wells, 303.628.6464
General Counsel
WITH QUESTIONS CONCERNING THE 2009 BUDGET DOCUMENT PLEASE CONTACT:
Grace Wilcox, 303.628.6245
Manager of Budget [email protected]
About Denver Water
Service Area 13
General 14-15
Water Use 16
Denver Community Profile 17
Mission and Values 18
Conservation Through the Years Denver Water has been asking customers to conserve for years, as shown in this 1939 photo of crews dismantling a water
tank at 32nd Avenue and Zenobia Street. In the early 1930s, Denver Water advertised on streetcar trolleys with the
message, “Water is Denver’s Greatest Natural Asset – Please Don’t Waste It.” And after a drought in the late 1970s, Denver
Water coined the term Xeriscape to promote low-water-use landscapes. Since then, Denver Water has pushed the advertising limits, flashing its signature Use Only What You Need message with costumed toilet runners, towers of bright orange 50-
gallon drums and a taxi left with only what it needed to run.
Denver Water Recreation Opportunities
Page 13
Page 14
General
History:
In 1918, Denver residents voted to create a five-
member Board of Water Commissioners and buy the
Denver Union Water Company's water system for
$14 million, creating Denver Water.
From that time on, Denver Water planned and
developed a system to meet the needs of the people of
Denver and the surrounding areas. Before World
War II, Moffat Tunnel and Eleven Mile Canyon
Reservoir were added to the system. Gross, Dillon
and Williams Fork reservoirs were added in
midcentury. The 23-mile Harold D. Roberts Tunnel
was completed in 1962, bringing water to Denver
from the other side of the Continental Divide.
Today, Denver Water’s service area covers more than
335 square miles, including the City and County of
Denver and several suburban areas. A system of
reservoirs networked by tunnels and canals provides
water to more than a million people. Three major
treatment plants – Marston, Moffat and Foothills –
maintain water quality under the watchful eye of the
Denver Water Quality Control Laboratory.
Denver Water:
Denver Water was established in 1918 (Denver citizens purchased water system from a private company). Is Colorado’s oldest and largest water utility. Is responsible for the collection, storage, quality control and distribution of drinking water to nearly one-fourth of all Coloradoans. Ensures a continuous supply of water to the City and County of Denver and Denver Water customers who live in the surrounding suburbs. Other sources: Fraser River, Williams Fork River, South Boulder Creek, Ralston Creek, Bear Creek.
Water Rates & Fees: Set by Board of Water Commissioners. Since its inception, the Board has set rates at a level sufficient to service its debt and meet its expenses of operation and maintenance. City Charter requires the Board to recover full costs plus an additional amount to customers who live outside the City and County of Denver.
Finances: Denver Water operates from the Water Works Fund, which ensures financial separation between Denver Water and the City. The general city government has no access to the Water Works Fund and the Water Board has no access to the City’s general fund. Denver Water generates revenues from sale of water to Denver and suburban customers and from the sale of hydropower to electric utility companies.
Page 15
Regional
Denver Water and the Community:
Denver Water serves more than a million people in
Denver and its surrounding suburbs. The majority
of Denver’s water comes from rivers and streams
fed by mountain snowmelt. The South Platte River,
Blue River, Williams Fork River and Fraser River
watersheds are Denver Water’s primary water
sources, but it also uses water from the South
Boulder Creek, Ralston Creek and Bear Creek
watersheds.
Denver Water produces one-third of the state’s
treated water supply, which is about 234,000 acre-
feet per year. An acre-foot equals 325,851 gallons of
water and is enough for about 2 ½ households for
one year. Denver Water customers use about
265,000 acre-feet of water a year, which is about 2
percent of all water, treated and untreated, in
Colorado.
Our Distribution System:
2681 miles of water mains (pipelines).
36.5 miles of non-potable pipes in the system.
18 pumping stations.
34 underground reservoirs in various city locations.
Treatment Plant Capacity:
Marston: 250 million gallons per day
Moffat: 185 million gallons per day
Foothills: 280 million gallons per day
Recycled Water Treatment Plant:
Recycled water is used for industrial purposes and for outdoor irrigation in parks, golf courses and other public spaces.
Treatment at the Recycle Plant incorporates biologically aerated filtration: coagulation, sedimentation, filtration and disinfection, to produce water that meets State regulatory requirements.
Recycling water enables Denver Water to use more of the water in its reservoirs to provide drinking water to Denver-area residents.
Page 16
Where Your Water Goes
www.denverwater.org
Water Use:
Average annual use for typical family home: 125,000 gallons per year (a little less than half an acre foot).
*Acre foot is a volume of water equal to one foot in depth covering an area of one acre or approximately 325,851 gallons
Total Water Use by Category:
48% Single Family Homes
21% Business & Industry
17% Multifamily Homes
9% Public Agencies
5% Unaccounted
Residential Water Use by Category:
54% Landscaping
13% Toilets
11% Laundry
10% Shower/baths
6% Faucets
5% Leaks
1% Dishwashers
.
Page 17
Square Miles 4,531
Population 2008 2,788,865
Population 2009 2,833,765
Population 2010* 2,877,742
Labor Force 1,546,648
Employment 1,384,905
Average Annual Wage $51,686
Median Age 35.6
Households 1,144,992
* Projected.
Metro Denver
Metro Denver Counties Population
Adams 444,869
Arapahoe 573,762
Boulder 300,136
Broomfield (City/County) 56,960
Denver (City/County) 615,109
Douglas 295,479
Jefferson 547,449
Total 2,833,765
Population
Sources: U.S. Department of Commerce, Bureau of the
Census; Colorado Division of Local Government, State
Demography Office.
Age Metro Denver
0-14 years 21.2%
15-29 years 20.8%
30-44 years 22.0%
45-59 years 21.6%
60-74 years 10.2%
75-89 years 3.9%
90 years & older 0.4%
Median Age 35.6
Population by Age, 2009
Sources: U.S. Department of Commerce, Bureau of the
Census; Colorado Division of Local Government, State
Demography Office.
Race Metro Denver
White 67.6%
Black 4.8%
American Indian 0.6%
Asian 3.4%
Hispanic Origin* 21.8%
Cultural Diversity
Population Composition
* Persons of Hispanic Origin may be of any
race. Source: U.S. Census Bureau, Population
Estimates Program.
Company Employment
HealthONE Corporation 9,180
Lockheed Martin Corporation 8,200
Qwest Communications 7,500
Exempla Healthcare 6,230
Centura Health 5,830
Kaiser Permanente 5,570
Denver Health 5,100
United Airlines 5,000
IBM Corporation 4,300
Frontier Airlines 4,220
Source: Development Research Partners, February 2009.
Major Employers - Metro Denver
Total Metro Denver Colorado
Total 1,546,648 2,730,477
Employed 1,470,229 2,596,309
Unemployed 76,419 134,138
Unemployment Rate 4.9% 4.9%
Source: Colorado Department of Labor and Employment, Local Area
Unemployment Statistics, 2008.
Labor Force
Income 2007 Metro Denver Colorado
Per Capita Personal $47,327 $41,192
Median Household $58,875 $55,212
Source: U.S. Department of Commerce, Bureau of Economic
Analysis, Colorado Per Capita Personal
Income. Released April 2009. U.S. Census Bureau, American
Community Survey, 2007.
Income
Coldest Month January, 43 degrees average
Warmest Month July, 88 degrees average
Average Humidity 40%
Average Precipitation 15.81 inches
Average Snowfall 60.3 inches
Average % Sunshine 69%
Source: U.S. National Oceanic and Atmospheric Administration, 2009.
The region has a semi-arid, four-season climate with
mild emperatures and 300 days of annual sunshine.
Climate
Home Price, 2008 $219,300 Median
Apartment Rent, 4Q 2008 $889 Average MonthlySources: Colorado Comps, National Association of Realtors., The Group,
Inc., and the Colorado Department of Local Affairs, Division of Housing.
Metro Denver Housing
Denver Community Profile
www.metrodenver.org
Page 18
Mission and Values
Mission: Denver Water will provide our customers with a reliable, high-quality water supply
and excellent service. We will be responsible and creative stewards of the assets we manage.
We will actively participate in and be a responsible member of our communities. We will
accomplish this mission with a productive and diverse work force.
Value: Our values describe the guiding principles and beliefs of Denver Water. We recognize
it is every employee’s responsibility to uphold these values in order to carry out and align the
mission with the vision of the organization. These values provide the framework and guidance
for decision making, daily performance, and ensuring consistency and excellence throughout
Denver Water.
Respect
Customer
Satisfaction
Safety &
Health Commitment
to the Future
Quality
Accountability
Leadership
Organization
Workforce
Diversity
Support Employee
Excellence Products &
Services
Strategic Plan
Vision
Innovation Professional
Growth
Organization
Denver Water 20-21
Manager and Staff 22-23
Human Resources 24-25
Public Affairs 26-27
Legal 28-29
Information Technology 30-31
Finance 32-33
Engineering 34-35
Operations & Maintenace 36-37
Planning 38-39
Cheesman Reservoir
Owned and Operated by Denver Water
Elevation: 6,842 feet (2,085 meters) – spillway crest
Capacity: 79,064 acre feet (1 acre foot = 325,851 gallons)
Cheesman Reservoir
Background
Named for Denver water pioneer Walter S. Cheesman, the dam was once the world’s tallest at 221 feet above the streambed when
completed in 1905. The reservoir and related facilities were purchased in November 1918 by the Denver Water Board. Cheesman was
the first reservoir of Denver's mountain storage facilities and has been designated a National Historic Civil Engineering Landmark. More
information about Cheesman Reservoir history is available in the About Us section.
Recreation Opportunities
Overview of available activities
fishing
Fishing is allowed ONLY on the Goose Lake Arm.
hiking
scenic overview
The Upper Cheesman Canyon trail provides scenic views of the reservoir.
Parking for the trailhead is located 200 yards north of the main parking for the reservoir.
Note: Water contact sports such as swimming, water skiing, wading and scuba diving are prohibited.
Cheesman Reservoir Closed to Visitors in 2010
Dec. 21, 2009 - Cheesman Reservoir will be closed to visitors beginning Jan. 1, 2010, as Denver Water makes essential upgrades to the
dam, which was built in 1905. The reservoir is scheduled to reopen May 1, 2011. Upper and lower Gill Trail will remain open to hikers
who want to access Cheesman Canyon throughout the closure period.
During the closure, Denver Water will be upgrading the dam’s valve system, which was installed when the dam was built in 1905, and
will be installing underwater trash racks to prevent debris from clogging the valves.
“Cheesman is more than 100 years old, and the underwater valves we are replacing were installed in 1905 and the late 1920s,” said
Brian Good, director of operations and maintenance. “Upgrading our aging infrastructure is vital to maintaining dam safety, providing a
viable water supply and ensuring smooth operations.”
Most of the construction at the site will take place underwater through specialized underwater diving construction techniques.
Page 20
Denver Water Highlights
Established in 1918, Denver Water is Colorado’s oldest and largest
water utility. In general we ensure a continuous supply of water to
the City and County of Denver and Denver Water Customers who
live in the surrounding suburbs. We are responsible for the
collection, storage, quality control and distribution of drinking water
to nearly one-fourth of all Coloradoans.
The leadership of Denver Water consists of a five-member Board of
Water Commissioners which is appointed by the Mayor of Denver to
staggered six-year terms. The Board appoints a Manager who is
chief executive officer of day-to-day operations; the Manager also
serves as Secretary to the Board.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
*Manager & Staff 14.0 15.0 16.0 7.0 8.0
*Human Resources 20.0 20.0 21.0 22.8 22.8
*Public Affairs 146.3 161.0 188.6 176.6 190.6
*Engineering 139.0 147.0 162.0 159.0 163.0
*Finance 54.0 56.0 59.0 58.0 60.0
*Information Technology 57.8 61.0 70.0 69.0 70.7
*Planning 41.4 45.0 47.6 46.6 48.6
*Operations & Maintenance 521.0 538.0 563.0 541.5 562.5
*Legal 13.8 12.0 13.6 14.6 14.6
Total 1,007.3 1,055.0 1,140.8 1,095.1 1,140.8
Denver Water
Regular & Introductory Employees (At End of Year)
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Page 21
Denver Water Goals for 2010
Assist the Board and the organization through a
smooth transition to a new manager.
Plan for future uncertainties that may affect water
supplies.
Be responsible stewards of our natural resources.
Apply technology to strengthen Denver Water’s focus
on customers.
Ensure that Denver Water is an efficient, effective,
desirable place to work.
Monitor the volatile economy and prepare for
potential effects to Denver Water and its customers.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 64,833 68,820 70,672 73,875 75,111
Employee Benefits 28,207 27,926 37,078 39,399 36,908
Material & Supplies/Plant Equip 19,557 26,895 27,854 24,876 28,212
Utility & Pumping 6,934 8,430 8,812 7,671 10,884
Professional & Other Services 37,396 55,979 53,573 52,288 50,409
General Equipment 2,593 3,026 3,615 3,816 4,965
Contract Payments 53,959 37,044 53,559 29,870 76,516
Refunds 865 2,162 673 1,801 1,170
Debt Service 53,678 49,575 51,655 50,616 50,324
All Other Miscellaneous 2,031 3,643 3,312 4,347 4,066
Total $ 270,053 283,500 310,803 288,559 338,565
Denver Water - Expenditure History
(Thousands of Dollars)
Denver Water Goals
Customer
Provide reliable service
Provide excellent service
Provide high quality
water
Financial
Exercise responsible
financial stewardship
Public Responsibility
Promote water efficiency
and wise water use
Develop additional
supplies for the future
Organization
Promote accountability
Improve efficiencies
Communication
Page 22
Manager and Staff Highlights
The Manager is the chief executive officer for Denver Water,
Secretary to the Board of Water Commissioners and custodian of
all records. He carries out all other duties and responsibilities as
assigned by the Board as it fulfills its City Charter obligations.
The Manager executes the policies and decisions of the Board and
reviews and recommends to the Board changes in rules and
regulations with respect to all matters appropriate for its action.
In addition, the Manager gives overall direction to employees and
oversees the work necessary to provide an adequate supply of
water to the citizens of the City and County of Denver, and areas
economically and socially integrated with the City with whom
Denver Water has a water service contract.
The Manager represents the Board in ongoing relationships with
all levels of government, community organizations, and the public served and recommends to the
Board a rate structure and other income producing procedures that will assure adequate sources
of funds to meet operating and maintenance costs, finance of ongoing capital improvement
programs, and the principal and interest payments on long-term debts.
Hamlet "Chips" Barry
Secretary-Manager
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Manager & Staff 14.0 15.0 16.0 5.0 6.0
** Internal Auditor 2.0 2.0
Total 14.0 15.0 16.0 7.0 8.0
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
**New section for Internal Audit.
Regular & Introductory Employees (At End of Year)
Manager & Staff
Page 23
Manager and Staff Goals for 2010
Clearly articulate Denver Water’s current direction
and vision.
Share information with and receive feedback from all
levels of the organization.
Gain a deeper understanding of the goals of
individual Board members and assist the Board in
defining their collective goals.
Accomplishments During 2009
Developed opportunities for Manager and Executive
Staff to interact with customers and employees in the
field.
Supported strategies that allow executive staff to
delegate work and spend more time thinking
strategically.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 1,947 2,087 2,049 2,054 821
Materials & Supplies/Plant Equip 3 12 7 4 5
Professioanl & Other Services 550 597 320 298 758
Total $ 2,500 2,696 2,376 2,356 1,584
Manager & Staff - Expenditure History(Thousands of Dollars)
Manager and Staff Goals
Financial
Exercise responsible
financial stewardship
Public Responsibility
Promote water efficiency
and wise water use
Develop additional
supplies for the future
Organization
Promote accountability
Improve efficiencies
Communication
Page 24
Human Resources Division Highlights
Under the direction of the Manager, the Human Resources
Division is responsible for interpreting, updating and enforcing
Denver Water’s Personnel Policies; maintaining and revising
Denver Water’s classification and pay plans; establishing and
maintaining employees’ personnel records; implementing policies,
procedures and programs relative to recruiting, hiring, managing
and retaining Denver Water employees; developing programs for
training, education, personal, professional and organization
development; implementing programs related to health promotion,
counseling, support, employee relations and equal opportunity;
administering Denver Water’s employee benefits and retirement
programs; investigating internal and external employee
complaints; and developing community outreach efforts with the
goal of establishing Denver Water as an employer of choice.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Human Resources 20.0 20.0 21.0 22.8 22.8
Total 20.0 20.0 21.0 22.8 22.8
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Regular & Introductory Employees (At End of Year)
Human Resources Division
Carla Elam-Floyd Director of Human Resources
Denver Water
Page 25
Human Resources Division Goals for 2010
Implement changes to the retiree medical program
and ensure that Denver Water offers benefits
comparable to peer organizations.
Develop strategic communication plans that engage
employees by giving them information about the
organization and how the work they perform fits into
Denver Water’s mission and vision.
Develop a proposal to make changes in Denver
Water’s compensation structure that allow employees
to be compensated at a level equal to their
contribution to the organization.
Accomplishments During 2009
Renewed healthcare benefit plans with changes to
help control costs and create more accountability on
the part of employees for the services used.
Conducted annual compensation review and
performed extensive analyses for Senior Staff and the
Board in order to make difficult decisions regarding
employee compensation.
Visited outlying area employees and discussed
upcoming Human Resources information and
changes. Encouraged employees to send concerns
and comments to HRQuestions.com. The information
gathered from employees was shared with Staff and
the Board for use in making compensation and
benefit decisions.
Working in conjunction with Legal, defined and implemented new Temporary Employee
guidelines to establish clarity and provide flexible staffing options.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 3,536 2,230 2,230 1,976 2,408
Employee Benefits 12,596 11,358 13,646 15,402 14,604
Materials & Supplies/Plant Equip 239 295 169 168 158
Professional & Other Services 2,242 2,165 2,266 1,361 2,560
Total $ 18,613 16,048 18,311 18,907 19,730
Human Resources Division - Expenditure History(Thousands of Dollars)
Human Resources
Division Goals
Organization
Promote accountability
Improve efficiencies
Communication
Page 26
Public Affairs Division Highlights
Under the direction of the Manager, the Public Affairs Division
facilitates relationships with people and entities outside of Denver
Water. The division responds to customer concerns and manages
customer relations, maintains cooperative relationships with
Denver City administration and governmental agencies whose
sphere of operation affects Denver Water, coordinates the
administration of distributor contracts, and facilitates Denver
Water’s relations with its various publics.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Director of Public Affairs 7.0 8.0 8.0 4.0 5.0
* Community Relations 5.4 6.0 7.6 9.6 9.6
* Conservation 12.0 15.0 17.0 17.0 18.0
Central Services 3.0 3.0 3.0 3.0 3.0
* Customer Care 39.3 43.0 45.2 41.2 43.2
** CIS Business Support 0.0 0.0 1.0 5.0 5.0
* Customer Services - Field 60.0 66.0 85.0 75.0 82.0
Meter Inspection Group 7.0 8.0 8.0 5.0 8.0
* Sales Administration 12.6 12.0 14.8 16.8 16.8
Total 146.3 161.0 189.6 176.6 190.6
**CIS Business Support was created to support the monthly billing system.
Regular & Introductory Employees (At End of Year)
Public Affairs Division
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions, and
section managers to their respective sections.
Marie L. Bassett
Director of Public Affairs
Page 27
Public Affairs Division Goals for 2010
Continue implementation of Customer Information
System to provide better service by allowing
employees to retrieve all customer information at one
time.
Communicate the Board’s resource strategies
throughout the permit process for enlarging Gross
Dam.
Support Planning Division’s IRP process and the
transition to a new Denver Water Manager
Accomplishments During 2009
Provided water efficient hardware to schools, non-
profits and low-income customers to increase water
conservation.
Accomplished July transition to new Customer
Information System and monthly billing. The
efficiencies allowed by the new software will be used
to increase the spectrum of services offered to
customers.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 6,911 8,321 8,879 9,673 10,149
Materials & Supplies/Plant Equip 1,689 3,216 4,609 4,092 8,156
Professional & Other Services 3,907 3,691 5,886 4,355 7,148
General Equipment 7 158 31 - 3
Refunds 776 1,048 580 1,484 1,080
All Other Miscellaneous 1,627 2,055 2,472 3,074 3,221
Total $ 14,917 18,489 22,457 22,678 29,757
Public Affairs Division - Expenditure History (Thousands of Dollars)
Public Affairs
Division Goals
Customer
Provide reliable service
Provide excellent service
Public Responsibility
Promote water efficiency
and wise water use
Organization
Communication
Page 28
Legal Division Highlights
The Legal Division represents and gives legal advice to Denver’s
Board of Water Commissioners, the Manager and the various
divisions of Denver Water. It also handles all of Denver Water’s
litigation.
The types of legal representation include water rights and
diligence proceedings, administrative proceedings before state and
federal agencies, contracts, civil rights, tort claims, real estate
and condemnations, and municipal, employment, environmental
and regulatory law. When special counsel are hired, the Legal
Division collaborates in and supervises their activities.
In addition, the Legal Division represents Board interests in
internal administrative appeals relating to personnel problems
and customer complaints, reviews and advises upon matters of pending legislation, and prepares
and reviews contract documents of all kinds.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Legal 13.75 12.0 13.6 14.6 14.6
Total 13.8 12.0 13.6 14.6 14.6
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Regular & Introductory Employees (At End of Year)
Legal Division
Patricia L. Wells General Counsel
Page 29
Legal Division Goals for 2010
Continue to provide legal advice and assistance as
needed to assist other divisions in accomplishing
their goals.
Resolve through negotiation or litigation the various
claims and lawsuits brought against Denver Water.
Participate in mediation efforts with West Slope
entities to help formulate workable agreements as
consensus is reached.
Accomplishments During 2009
Provided legal expertise and opinions in the
mediation with Western Slope water users that has
made progress during the past year.
Updated standard contract formats with regard to
several legal issues, and created formats for contracts
related to water conservation incentives.
Provided guidance and legal assistance during the
National Environmental Policy Act (NEPA)
permitting process for the enlargement of Gross
Reservoir.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 1,110 1,178 1,165 1,183 1,403
Materials & Supplies/Plant Equip 4 3 2 6 3
Professional & Other Services 386 1,398 316 1,294 938
All Other Miscellaneous 353 1,544 730 1,247 735
Total $ 1,853 4,123 2,213 3,730 3,079
Legal Division - Expenditure History(Thousands of Dollars)
Legal Division Goals
Customer
Provide reliable service
Financial
Exercise responsible
financial stewardship
Organization
Promote accountability
Improve efficiencies
Communication
Page 30
Information Technology Division Highlights
Under the direction of the Manager, the Information Technology
Division develops, implements and supports computer
applications, data-center operations and the technology
infrastructure for Denver Water. This involves identifying and
implementing appropriate technologies to meet the business needs
of Denver Water, providing appropriate resources to support
technologies that are implemented, providing availability of these
technologies 24 hours per day, seven days per week and providing
security for information maintained on the various computer
systems.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Information Technology 57.8 61.0 70.0 69.0 70.7
Total 57.8 61.0 70.0 69.0 70.7
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Regular & Introductory Employees (At End of Year)
Information Technology Division
Christopher R. Dermody Director of Information
Technology
Page 31
Information Technology Division Goals for 2010
Improve Asset Management capabilities through
automation solutions related to work management,
GIS information access, accounting process for Use of
Funds tracking, asset information management and
O&M information management.
Improve time keeping capabilities, efficiencies and
accuracy by completing the implementation of the
Enterprise Time Management System.
Improve information reporting and analysis by
completing the development of a new Customer Data
Warehouse.
Improve various customer service and conservation
related capabilities through enhancements to the CIS
System.
Accomplishments for 2009
Improved customer service capabilities, rate design
capabilities, billing flexibility, and internal
efficiencies with the implementation of the new
Customer Information System.
Improved Asset Management capabilities.
Improved contract administration capabilities by
enhancing the Contract Administration System to
better handle SDBE information management and
tracking of insurance information.
Improved the management of Health & Safety tracking system.
Improved Conservation capabilities through enhancements to the mobile and back-office
systems.
Improved Engineering and Budgeting capabilities through various enhancements to the
Engineering Project Planning and Enterprise Budgeting Systems.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 5,267 5,369 5,550 6,415 6,698
Materials & Supplies/Plant Equip 2,133 2,677 1,767 2,138 1,223
Utility & Pumping 1,402 1,458 1,617 1,854 2,584
Professional & Other Services 6,566 16,216 20,184 14,333 10,292
General Equipment 338 53 59 45 1,588
Total $ 15,706 25,773 29,177 24,785 22,385
Information Technology Division - Expenditure History(Thousands of Dollars)
Information Technology
Division Goals
Customer
Provide reliable service
Financial
Exercise responsible
financial stewardship
Organization
Promote accountability
Improve efficiencies
Communication
Page 32
Finance Division Highlights
Under the direction of the Manager, the Finance Division is
responsible for managing financial resources, acting as the
disbursing authority for the Manager and providing electronic record
keeping.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Director 9.0 9.0 10.0 2.0 3.0
** Finance Computer Support 0.0 0.0 0.0 2.0 2.0
* Treasury Operations 7.0 7.0 7.0 8.0 8.0
* Budget Section 4.0 4.0 4.0 5.0 5.0
* Accounting 18.0 19.0 19.0 19.0 20.0
* Rate Administration 2.0 3.0 3.0 4.0 4.0
* Records & Document Admin 6.0 6.0 8.0 9.0 9.0
* Purchasing 8.0 8.0 8.0 9.0 9.0
Total 54.0 56.0 59.0 58.0 60.0
**Finance Computer Support was previously included with Director.
Regular & Introductory Employees (At End of Year)
Finance Division
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions, and section
managers to their respective sections.
David B. LaFrance Director of Finance
Page 33
Finance Division Goals for 2010
Provide leadership, guidance and support as part of a
smooth and seamless management transition.
Provide financial leadership for strategic Board
initiatives such as the Western Slope mediation,
Wise project and Gross Enlargement and keep
Denver Water financially strong and fiscally
responsible.
Continue to work toward breaking down barriers
between divisions.
Accomplishments for 2009
Provided financial leadership on several enterprise
initiatives such as the CIS implementation, CIS-City
financing, gravel pit financing, and retirement plan
assessment recommendation.
First issuer of Build America Bonds in Colorado.
Improved budget processes and integrated work
teams, improved contract controls, updated retention
schedules, obtained numerous competitive bids, and
achieved GFOA awards.
Increased financial employee understanding of
Denver Water’s governance and strategic vision by
their attendance at a Board meeting and reading the
draft strategic plan.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 3,343 3,629 3,701 3,870 4,191
Employee Benefits 14,868 15,844 23,431 23,396 22,305
Materials & Supplies/Plant Equip 651 456 546 652 561
Professional & Other Services 1,995 1,877 2,685 2,575 2,718
General Equipment - - - 213 50
Contract Payments - 123 - - -
Refunds 85 1,102 93 277 90
Debt Service 53,678 49,575 51,655 50,616 50,324
All Other 32 36 40 15 40
Total $ 74,652 72,642 82,151 81,614 80,279
Finance Division - Expenditure History(Thousands of Dollars)
Finance Division Goals
Financial
Exercise responsible
financial stewardship
Public Responsibility
Promote water efficiency
and wise water use
Develop additional
supplies for the future
Organization
Improve efficiencies
Page 34
Engineering Division Highlights
Under the direction of the Manager, the Engineering Division is
responsible for the design, construction and related engineering
aspects of physical additions or improvements to the water
system.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Director of Engineering 4.0 3.0 4.0 6.0 6.0
Programs & Projects 41.0 49.0 55.0 57.0 59.0
Survey 25.0 26.0 27.0 26.0 26.0
Asset Recording 7.0 7.0 8.0 7.0 7.0
Distribution/Property Mgmt 39.0 41.0 44.0 40.0 41.0
Construction Management 23.0 21.0 24.0 23.0 24.0
Total 139.0 147.0 162.0 159.0 163.0
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Regular & Introductory Employees (At End of Year)
Engineering Division
Robert J. Mahoney Director of Engineering
Page 35
Engineering Division Goals for 2010
Start and complete construction of the Einfeldt
Decentralization Station.
Complete construction of new inlet control at
Cheesman Dam and begin demolition of original
valves.
Continue progress on the Vault and Pipe
Rehabilitation programs.
Initiate new Project Management training series to
enhance project delivery capabilities.
Complete design and start construction of Siphon 5
on the Moffat Collection System.
Accomplishments for 2009
Placed Miller Reservoir online and completed
construction of Cat Reservoir Pump Station.
Continued work on the Pipe and Vault Rehabilitation
programs and the South Boulder Diversion Canal
Replacement Program.
Published first draft of system wide Infrastructure
Master Plan.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 9,359 10,528 10,904 11,837 12,751
Materials & Supplies/Plant Equip 1,597 3,016 4,669 2,305 1,810
Utility & Pumping 177 152 145 151 115
Professional & Other Services 8,783 13,410 5,083 11,065 6,874
General Equipment 231 409 375 524 175
Contract Payments 53,953 36,904 53,500 29,870 76,255
Refunds 2 9 - 3 -
Total $ 74,102 64,428 74,676 55,755 97,980
Engineering Division - Expenditure History(Thousands of Dollars)
Engineering Division Goals
Customer
Provide reliable service
Provide excellent service
Financial
Exercise responsible
financial stewardship
Public Responsibility
Develop additional
supplies for the future
Organization
Promote accountability
Improve efficiencies
Page 36
Operations and Maintenance Division Highlights
The Operations and Maintenance Division is responsible for the
collection, treatment, and distribution of potable and recycled water.
The Division operates and maintains major dams and reservoirs,
hydropower generating facilities, multiple raw water tunnels and
canals, treatment plants, finished water reservoirs with pump
stations, and nearly 2,700 miles of water mains throughout Denver
and its Total Service area.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
Recycled Water Program 0.0 0.0 0.0 1.0 1.0
* Plant Office 3.0 3.0 4.0 4.0 4.0
Water Quality & Compliance 32.0 32.0 33.0 32.0 33.0
Safety & Loss Control 14.0 15.0 16.0 16.0 16.0
Source of Supply 53.0 60.0 62.0 60.0 62.0
Water Treatment 90.0 92.0 92.0 89.0 91.0
Water Control 54.0 57.0 61.0 57.5 60.5
Transmission & Distribution 144.0 145.0 158.0 149.0 158.0
Instrumentation & Control 11.0 11.0 13.0 12.0 13.0
Maintenance and Warehouse 120.0 123.0 124.0 121.0 124.0
Total 521.0 538.0 563.0 541.5 562.5
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Regular & Introductory Employees (At End of Year)
Operation & Maintenance Division
Brian D. Good Director of Operations
& Maintenance
Page 37
Operation & Maintenance Division Goals for 2010
Participation in various master planning efforts.
Improve two-way communication throughout O&M to
improve efficiency and to ensure compliance with
various initiatives.
Improve employee training and the transfer of
knowledge due to continued workforce turnover.
Accomplishments for 2009
Designed, constructed and initiated test of a pilot
plant looking at sodium hypochlorite as an
alternative disinfectant to chlorine. Final testing
and a written report are due in 2010.
Participated in various stakeholder groups such as
the Douglas County Local Emergency Planning
Council and regulatory groups such as the Water
Utility Council and Water Treatment Residuals
Committee.
Fleet and maintenance shops improved efficiency and
provided better asset management through use of
predictive-maintenance procedures and our
computerized maintenance management system.
Implemented new, more flexible and fuel-efficient
vehicles.
Water Control developed new operator-training
programs, commissioned the new backup operations facility, updated all existing
standard operating procedures and began development of new procedures using
SharePoint as a tool to coordinate and share information.
Continued to redevelop our cross-connection control program, implementing a new
software program in conjunction with the CIS and working diligently with Denver Parks
and our distributors to update our records and ensure compliance with state regulations.
A new Cross-Connection-Control-Tester certification program was developed.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 29,979 31,917 32,264 32,858 34,615
Materials & Supplies/Plant Equip 13,196 17,180 16,030 15,486 16,242
Utility & Pumping 5,141 6,537 6,797 5,353 6,968
Professional & Other Services 10,679 13,344 12,706 13,857 14,766
General Equipment 2,017 2,405 3,144 3,033 3,145
Total $ 61,012 71,383 70,941 70,587 75,736
Operations & Maintenance Division - Expenditure History (Thousands of Dollars)
Operation & Maintenance
Division Goals
Customer
Provide reliable service
Organization
Promote accountability
Improve efficiencies
Communication
Page 38
Planning Division Highlights
The Planning Division identifies the future water and facilities
needs of Denver Water and develops strategies for meeting those
needs. As it plans for the future, Planning must consider how new
water rights, infrastructure and resource management
alternatives will work with the Board's existing raw water
collection and treated water distribution systems.
2007 2008 2009 2009 2010
Section Actual Actual Budget Actual Budget
* Director of Planning 2.0 2.0 2.0 3.0 3.0
Environmental Planning 4.6 5.0 5.6 5.6 5.6
Raw Water Supply 6.0 6.0 6.0 6.0 6.0
Water Rights 7.0 7.0 8.0 7.0 8.0
Raw Water Planning 10.8 11.0 11.0 11.0 11.0
Water Resource Planning 4.0 2.0 2.0 2.0 2.0
Demand Planning 4.0 5.0 4.0 5.0
Treated Water Planning 7.0 8.0 8.0 8.0 8.0
Total 41.4 45.0 47.6 46.6 48.6
*Starting with 2009 Actual, Director positions moved from Manager & Staff to their respective divisions.
Planning Division
(Thousands of Dollars)
David Little Director of Planning
Page 39
Planning Division Goals for 2010
Continue progress towards obtaining the Final Moffat
Supply project Environmental Impact Statement.
Complete critical Watershed Wildfire Protection Plans
Assessments and Prioritization for the St. Vrain
(Gross Reservoir) watershed and continue to identify
and implement on-the-ground forest treatments in
Denver Water’s collection system.
Take the lead in deciding if and how to proceed as a
partner in the WISE project.
Complete the new Integrated Resource Plan.
Complete the treated Water Planning Study.
Resolve mediation efforts of Green Mountain
Reservoir and operating mechanisms.
Continue development of Denver Water’s Conservation Plan.
Support the Board initiative for the Western Slope mediation.
Accomplishments for 2009
Completed the draft Environmental Impact Statement (EIS) for the Moffat Collection
System Project and attended Public Hearings.
Upper Colorado and Blue River Watershed Wildfire Protection Plans Assessments
completed.
Incorporated the south gravel pit complex into raw water operations.
Continued planning for development of the treated water distribution system.
Preserved water resources by successfully addressing water rights issues, endangered
species studies, and other environmental concerns.
Established a more efficient 10-Year capital plan/annual budget process.
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Salaries & Wages $ 3,381 3,561 3,928 4,008 4,299
Materials & Supplies/Plant Equip 45 39 54 26 55
Utility & Pumping 215 283 253 309 1,217
Professional & Other Services 2,968 3,310 4,246 3,201 4,669
Contract Payments - - 16 - 16
General Equipment - - - - 5
Total $ 6,609 7,193 8,497 7,544 10,261
Planning Division - Expenditure History (Thousands of Dollars)
Planning Division Goals
Financial
Exercise responsible
financial stewardship
Public Responsibility
Promote water efficiency
and wise water use
Develop additional
supplies for the future
Organization
Promote accountability
Improve efficiencies
Communication
Strategic Overview
Long-Range Planning 40
Strategic Planning 40-41
Integrated Resource Planning 42
10-Year Planning 42-44
Annual Budget Process 45
Financial Policies 46-47
Fund Structure 48
Debt Information 49
Dillon Reservoir
Owned and Operated by Denver Water
Elevation: 9,017 feet (2748 meters) – spillway
Capacity: 257,304 acre feet (1 acre foot = 325,851 gallons)
Photo by Jackie Shumaker
Photo by Jackie Shumaker
Photo by Jackie Shumaker
Dillon Reservoir
Background
Completed in September 1963, Dillon Reservoir is the largest water storage facility in the Denver Water system. The entire town of
Dillon, Colorado, and a hydroelectric plant were relocated to build the dam. The dam was built to divert water from the Blue River Basin
through the Harold D. Roberts Tunnel under the Continental Divide into the South Platte River Basin. Dillon Dam is an earth-fill dam,
5,888 feet long by 231 feet above the Blue River stream bed. Dillon Reservoir's surface area of 3,233 acres and 26.8 miles of shoreline
supports many recreational activities.
Recreational Opportunities
Overview of available activities
Page 40
Denver Water Long-Range Planning Activities
Long-Range Planning
The Denver Water Board engages in a number of long-range planning efforts, all of which have a
direct impact on the budget. The diagram above illustrates the intricate linkage between these
various planning efforts.
Strategic Planning
In 2008, Denver Water staff began the process of revising the Strategic Plan for the first time in
more than 10 years. The process began by hiring a strategic planning professional who led
interviews with executive staff and Board Members, as well as a series of employee and
stakeholder focus groups. All employees were invited to give input and provide feedback
throughout the process. Through this process recurring issues to be addressed were identified
and a two-day strategic planning retreat was held to refine our Mission Statement and Values
and develop draft strategies to advance the organization toward a 2013 Vision.
The major themes addressed during the 2009 Strategic Plan update were related to customers,
employees, management roles and responsibilities, Board roles and responsibilities, proactively
addressing change, and stewardship of our assets and water supply.
Strategic Plan(Mission and Values)
Integrated Resource Plan(Water System Plan)
Work Force Plan Other Efforts Affecting IRP• Treated Water Study• Conservation Plan• West Slope Mediation• Aurora Pipeline Study• Conditional Water Rights Review• Moffat EIS• Watershed Management Plan• Recycled Water Master Plan• Others
Technology Plan
Financial Plan• 10-Year Capital and O&M Plans
• Rate, Debt, and Reserve Plans
Asset Management Plan
Engineering Vision Plans
Denver Water Long Range Planning Activities
Communications Plan
Page 41
The table to the left outlines
the Denver Water Vision for
2013. In the Draft Strategic
Plan, strategies have been
identified to ensure that the
organization achieves this
vision. Many of the strategies
outlined in the plan do not
have a direct budgetary
impact. Examples of such
strategies include having
executive-level staff spend
more time in the field to
promote an understanding of
what employees do every day,
improving communications,
attending more community
meetings, and encouraging
employees to volunteer in the
community. Other strategies,
such as implementing the
Conservation Plan, visiting
other utilities to gain
efficiencies through best
practices, and developing an
enterprise-wide asset
management plan, will
require the dedication of
financial resources and are
reflected either in the 2009
Annual Budget or the long-
range plans.
Although many aspects of our
Draft Strategic Plan are
currently implemented, the
Board is delaying official
implementation until a new
Chief Executive Officer is
hired.
Our Vision for 2013
1. We are recognized as the best water utility in the
country and consistently are among the most desirable
places to work in the state.
2. We have the trust of our customers, Board and
employees.
3. Employees feel valued and believe their work makes a
difference. Everyone within Denver Water is fully
engaged and committed to achieving the goals of the
organization.
4. We have become a more green organization.
5. We are highly regarded for planning for uncertainties
such as climate, regulatory and demographic changes.
6. We have played a key role and been the catalyst for
solving Front Range water supply problems.
7. We are a responsible steward of the natural
environment.
8. We have reduced the controversies regarding our
water rights.
9. Denver Water maintains a leadership role within
Colorado regarding Colorado River Compact issues.
10. The 2010 Integrated Resource Plan is being
successfully implemented.
11. Denver Water has a reputation for being a good
neighbor and a community resource.
12. Water conservation is recognized by our employees and
customers as necessary and important in managing
water as a precious resource.
13. Wasting water is universally viewed as being socially
irresponsible.
14. We have a highly reliable and well maintained
infrastructure.
15. We have become a well respected applied research
organization.
16. We are financially strong and fiscally prudent.
17. Denver Water is a leader among water utilities in
optimizing the use of technology.
18. We have achieved the goals set forth in the 2009
Strategic Plan.
Page 42
Integrated Resource Planning
In 1997, Denver Water was one of the first water utilities in the country to prepare an Integrated
Resource Plan (IRP) to address changes in the water service industry that could impact our
service area. The IRP is narrower in scope, but more detailed than the Strategic Plan and
specifically addresses the level of system reliability we want to provide to customers, new facility
needs, water quality issues, and operations and maintenance direction for our treatment and
distribution systems. The 1997 plan resulted in the Board issuing a Resource Statement that
identified a near-term strategy of conservation, non-potable reuse, system refinements,
cooperative resource projects and supply projects. These projects are currently under
development.
Efforts are currently underway to update the IRP. It has become apparent that the future for
which the organization is planning is uncertain. New developments that could influence the
Board’s future actions include the severe drought, catastrophic wildfires, terrorist attacks,
climate change, the pine beetle impact on our watersheds, and new risks of regulatory changes.
The new IRP process addresses the need for an expanded, more fully integrated long-range
planning process that will:
1. Incorporate new demand planning and conservation opportunities.
2. Address emerging water quality challenges.
3. Integrate planning across the raw water, treatment, distribution, and recycling water
systems in a more complete manner.
4. Redefine the appropriate levels for system reliability and water service goals.
5. Develop planning strategies for addressing new uncertainties from climate changes,
regulatory risks, demand pattern changes, system failure risks and rehabilitation
requirements, and others.
6. Reassess the Board’s role in regional and statewide water activities.
7. Integrate the results of the new IRP into future Capital Plans.
The projects that were identified in the 1997 IRP and subsequent 2002 update are underway and
are included in our 10-Year Capital Plan. Examples of these projects are the Moffat Collection
System and Gravel Pit storage, which are discussed in the section below. When the new IRP is
completed in 2010, the results will be integrated into the long-range Capital Plan.
10-Year Financial Planning
Each year Denver Water engages in a 10-Year Financial planning process that looks at capital
and operating priorities over the next ten years. Finance Division staff then conduct an analysis
to determine the appropriate combination of rate revenue, debt, and cash reserves needed to
finance the plan.
The 2010-2019 Financial Plan reflects Denver Water’s focus on planning for the water needs of
our customers and our neighbors in the coming years. Our organizational commitment to
meeting these needs through a combination of new water supply, water conservation, and water
reuse is apparent in these documents.
Page 43
The single largest project in the 10-Year Capital Plan is the Moffat Collection System project.
Currently, over 80% of Denver Water’s system relies on the unimpeded operation of just one of
our reservoirs (Strontia Springs). An emergency above this reservoir or an extreme drought
could result in a shortage of water in the Moffat Collection System. Denver Water has performed
extensive reviews of alternatives to increase water supply to this system. Enlarging Gross
Reservoir is the least costly and most environmentally friendly means to achieve the required
additional water supply. The current 10-Year Plan estimate for the project is $226 million, with
construction scheduled for 2012-2016. In late 2009, the U.S. Army Corps of Engineers issued a
draft Environmental Impact Statement for this project and instituted a public comment period
that will go through March, 2010. Once the comment period is closed, the Corps will analyze the
comments and incorporate them where appropriate. If major changes to the scope of the project
are not required, the Corps could issue Denver Water a permit for the project by the end of 2010.
The 2010 budget contains $1.4 million for the completion of the Environmental Impact
Statement and the commencement of design work.
The 10-Year Capital Plan also outlines $51.1 million in funding for our Gravel Pit Storage
Projects. These projects, which are being developed cooperatively with other Denver Metro area
water users, reclaim mined gravel pits and convert them into water storage which can be used
for river exchanges or to supplement water available to the non-potable reuse plant. For 2010,
just over $5.0 million has been allocated for construction work on the gravel pits, including
construction of a pump station, an interconnect pipe, and additional land purchases.
The Denver Water commitment to non-potable reuse is also reflected in the 10-Year Capital
Plan. The Board of Water Commissioners has expressed a desire to accelerate the build out of
the recycled water system to 2020. There is a total of $130.0 million allocated to the expansion of
the recycled water plant and distribution system. The distribution system will grow to connect
new customers to the system. An expansion of the recycled water plant is scheduled for 2017-
2019 and will add 15MGD capacity to the facility. The 2010 capital improvement plan provides
$4.8 million for the expansion of our recycled distribution system.
As is the case with most water utilities, Denver Water is faced with an aging infrastructure, with
some parts of the collection, treatment, and delivery system nearing the end of their useful life.
In order to meet our strategic objective and charter requirement to deliver high quality water at
the lowest possible cost, we must step up our efforts to replace this aging infrastructure. This
commitment is also reflected in the 10-Year Capital Plan where we have budgeted $130.0 million
for pipe replacements and rehabilitation, more than double the amount spent in the previous 10
years. The 2010 capital improvement plan includes a 10% funding increase for system
reinvestment.
The single largest project in the 10-Year Capital Plan
is the Moffat Collection System project.
Page 44
The graph presented here shows how Denver Water’s Operating Costs are expected to grow over
the next 10 years. Much of the growth represented in this chart is related to our commitment to
water supply, reuse, and conservation as outlined above.
The largest single operating expenditure in the planning horizon is the removal of sediment from
the Strontia Springs Reservoir. During the Buffalo Creek (1996) and Hayman (2002) fires, much
of the vegetation in this watershed was destroyed. As a result, rainstorms now push sediment
into the reservoir and 8-10% of the storage capacity has been lost. This project was originally
scheduled to begin in 2009, but was delayed one year when the Board adopted a revised budget
in April, 2009. In the next two years, Denver Water will engage in a $26 million project to regain
lost capacity by removing the sediment and piping it to our Kassler Facility, over 6 miles
downstream. The 2010 Approved Budget allocates $8.0 million for design and construction work
on this project.
The 2010-2019 Operating Plan also reflects Denver Water’s continued efforts to encourage our
customers to use water wisely in all situations. In 2006, the Denver Water Board directed staff
to accelerate conservation programs in order to achieve its stated goal of 29,000 acre-feet of
water savings in 2016 rather than in 2050 as originally planned. Denver Water expects to spend
$89.0 million on conservation programs in the next 10 years. In 2010, $11.4 million will be spent
on education and outreach, rebates and incentives, and monitoring and evaluation of each
program.
As with most public sector enterprises, Denver Water is also anticipating significant future cost
increases for chemicals, maintenance, security, and employee benefits. These increases are
reflected in the 10-Year Plan and the 2010 Annual Budget.
Once the 10-Year Capital and Operating priorities have been finalized and incorporated into the
Financial Plan, the Finance Division, works to develop the strategy to finance the plan. The
draft 10-Year Financial Plan is presented to the Board in July. After Board approval, the water
rates are developed for the following year.
Page 45
The annual budget process begins in July, when the 10-Year Financial Plan has been finalized.
The first year of the completed Financial Plan is presumed to be the following year’s annual
budget. Measurable changes are made to the annual Capital and Operating budgets as
estimates for revenues, staffing levels, salaries, benefits, and project schedules are refined.
Throughout the fall, meetings are held with the Board’s Budget subcommittee to discuss budget
assumptions or changes that have occurred since the rates were adopted. At the public Board
workshop in November, the full Board is presented with a draft of the annual budget. Feedback
is incorporated into the budget and the final budget is presented to the Board for adoption at a
public meeting in early December.
Amending the Budget
Budgets for projects or activities may be added or revised during the year. When possible, funds
are transferred from another project that has been delayed or cancelled. All changes must be
requested via an official variance notification to the Budget Manager and signed by the
appropriate Division Director. Division Directors can authorize expenditures up to $10,000
without further approval. Expenditures up to $100,000 can be authorized by the Manager, but
all contracts and purchases over $100,000, whether budgeted or unbudgeted, must be authorized
by the Board of Water Commissioners. The Board Agenda Item form provides transparent
information as to whether a particular item was budgeted in the current year.
The Budget Office provides a variance report and updated forecast at the end of each quarter to
the executive staff and the Board Budget Subcommittee. These reports provide information
about year-to-date budget performance and changes which occurred during the previous quarter
and their impact on reserve balances.
Annual Budget Process
Page 46
Summary of Financial Policies
The Board has established financial policies that constitute the basic framework for the financial
management of Denver Water. These policies are intended to assist members of the Board and
Denver Water’ s staff in evaluating current activities and proposals for future programs, and are
reviewed on an annual basis and modified to accommodate changing circumstances or conditions.
Where applicable, copies of the financial policies are included in the appendix at the end of this
document. A summary of these policies is presented below:
Balanced Budget: The Denver Board of Water Commissioners has not adopted an official
policy on a balanced budget. Our practice is to balance the budget by the
planned use or contribution to investment balances.
Cash Reserves: The Charter of the City and County of Denver specifically allows the
accumulation of reserves “sufficient to pay for operation, maintenance,
reserves, debt service, additions, extensions, and betterments, including
those reasonably required for anticipated growth of the Denver
Metropolitan area and to provide for Denver’s general welfare.” The
Board’s practice is to maintain reserves that are sufficient to provide 25%
of the next year’s operating costs, 50% of replacement capital and
equipment purchases, one year of debt service, and a 5% self-insurance
reserve.
Basis of Accounting: The Board’s financial statements are accounted for on the flow of
economic resources measurement focus, using the accrual basis of
accounting. Under this method, all assets and liabilities associated with
operations are included on the statement of net assets, revenues are
recorded when earned, and expenses are recorded at the time liabilities
are incurred. This is different from the basis of budgeting. The Denver
Water budget is prepared using the modified accrual basis in which
revenues are recorded when they become available and expenditures are
recorded at the time liabilities are incurred.
Accounting Standards: The Board’s financial statements are prepared in accordance with
principles generally accepted in the United States of America (GAAP).
Additionally, the Board applies all applicable pronouncements of the
Governmental Accounting Standards Board (GASB).
Chart of Accounts: The Chart of Accounts utilized by Denver Water generally follows the
structure presented by the National Association of Regulatory Utility
Commissioners for Class A Water Utilities (NARUC).
Capital Policy: Initial acquisition costs of assets are capitalized if they have a service life
of more than one year and a cost of $5,000 or more. Costs not meeting
these criteria are expensed. Depreciation and amortization are computed
using the straight-line method over the estimated useful lives of the
respective asset classes.
Page 47
Revenues: Denver Water is completely funded through rates, fees and charges for
services provided by Denver Water. There are no transfers to or from the
City’s general fund. Water rates pay for operation and maintenance
expenses, repair, capital replacements and modifications to existing
facilities, debt service and a portion of the costs of new facilities and
water supply.
Expenditures: In planning expenditures, Denver Water follows the City Charter’s
mandate to keep rates as low as good service will permit. In practice this
means that Denver Water will properly maintain its facilities and
continuously seek ways to operate more efficiently.
Risk Management: The Board is exposed to various risks of loss, including general liability,
(limited under the Colorado Governmental Immunity Act to $150,000 per
person and $600,000 per occurrence) property damage, employee life,
medical, dental and accident benefits. The Board has a risk-management
program that includes self-insurance for liability, employee medical,
dental and vision. The Board carries commercial property insurance for
catastrophic losses, including floods, fires, earthquakes and terrorism for
identified major facilities.
Investments: The Board has protection of principal as its primary investment policy
objective. The Board designates its authority to invest monies deposited
in the Water Works Fund to the Manager and the Director of Finance.
According to the current investment policy, U.S. Government obligations
and government sponsored federal agency securities, commercial paper,
corporate fixed income securities, money market funds and repurchase
agreements are permissible investments. The official policy outlines
allowable credit risk and maximum maturities for each investment type.
Debt Guidelines: Denver Water has no legal debt limits. However, the Board has adopted
Debt Guidelines to guide the timing and use of debt in the future. The
guidelines set forth a policy that prevents debt proceeds from being used
to pay operating and maintenance expenditures. The guidelines instruct
that debt proceeds will be used only for current refunding, advanced
refunding and payment for non-recurring capital projects that expand the
system or are otherwise unusual in nature or amount.
Page 48
Fund Structure
Denver Water is an “enterprise” of the City within the meaning of Article X, Section 20 of the
Colorado Constitution. The Board maintains a single fund as mandated by the City Charter
which states:
“There is hereby created a Water Works Fund into which shall be placed all revenues received from the operation of the Water Works system and plant together with all monies received by the Board from other sources…”
Although the Board approves the rates and the annual budget, no funds are appropriated.
Fund Balance: Denver Water defines fund balance for the Water Works Fund as the balance at
the beginning of the period, plus the total sources of funds, less total uses of funds for the period.
Within the Water Works Fund there are legally restricted funds and Board designated funds. As
outlined above, the Board targets reserves to pay for operating, capital, self-insurance and debt
service in an emergency, in addition to the restricted and designated funds. Any excess funds
above these target amounts are considered available for future capital projects.
6
Page 49
Debt Information
As set forth in the debt guidelines adopted in May, 2003, Denver Water issues debt only for
refunding current maturities of existing debt (current refunding), refunding future maturities of
existing debt (advance refunding), and for non-recurring capital expenditures. Operating
expenses and capital improvements of a normal recurring nature are included in the calculation
of the revenue requirement from rates and are, therefore, financed on a “pay-as-you-go” basis.
The Treasury section monitors the marketplace and evaluates the appropriateness of various
financing sources for specific capital projects. The expected life of the asset, the nature of the
covenants, and the impact on the organization’s future financial flexibility and whether Denver
Water will be able to support the projected level of debt are analyzed.
Denver Water’s policy is to structure current refunding so that the final maturity of the debt
does not exceed the useful life of the asset. Advance refunding is considered when the net
present value savings on the bonds being refunded are greater than 3% and the refunding is
permitted by statutory regulations.
Denver Water’s debt guidelines state the organization’s desire to maintain the stand-alone
revenue bond rating at a level of AA or better. In order to maintain or exceed this rating Denver
Water uses the following, guidelines in financial planning activities:
a. The Debt Ratio (Total Debt divided by the sum of net fixed assets plus net working
capital) should not exceed 40%.
b. Interest Coverage (Net Revenues divided by Interest Requirements-excluding System
Development Charges) should be equal to or greater than 2.5x.
c. Debt Service Coverage, as defined in the Master Bond Resolution should be equal to or
greater than 2.2x.
d. The year-end balance in the Water Works Fund, net of Principal and Interest
Requirements for the next 12 months should be equal to or greater than $5 million.
Year Principal Interest Total
2010 32.2$ 19.1$ 51.3$
2011 24.0 17.4 41.4
2012 19.7 16.2 35.9
2013 21.1 15.3 36.4
2014 22.1 14.3 36.4
2015 23.2 13.2 36.4
Debt Principal and Interest Obligations
(in Millions of dollars)
Budget Summary
Comparison of Sources and Uses of Funds 50
Priorities and Issues 51-54
Eleven Mile Canyon Reservoir
Owned and Operated by Denver Water
Elevation: 8,602 ft. (2,261m) – top of dam
Capacity: 97,779 acre feet (one acre foot = 325,851 gallons)
Photo by Jackie Shumaker
Photo by Jackie Shumaker
Photo by Jackie Shumaker
Eleven Mile Canyon Reservoir
Background
Completed in 1932 after two years of construction at a cost of only $1.5 million, Eleven Mile stands 135 feet above the South Platte
riverbed. The six-mile long reservoir is second largest in the Denver system and one of the largest bodies of water east of the
Continental Divide. Eleven Mile has a surface area of 3,405 acres and 23.9 miles of shoreline.
Recreation Opportunities
Overview of available activities
Page 50
The above table shows a comparison of Denver Water’s 2010 Budget to the
2009 Budget and actual expenditures from 2007-2009.
2007
Actual
2008
Actual
2009
Budget
2009
Actual
2010
Budget
Beginning Investment Balance $149,198 $226,160 $198,311 $198,311 $194,012
Operating Revenue 194,224$ 204,232$ 212,028$ 188,293$ 223,305$
Non-Operating 2,843 3,140 3,157 2,467 3,482
Hydropower 2,392 4,315 3,305 4,949 3,797
System Development Charges 26,213 19,138 8,000 9,013 8,000
Participation, Reimbursements & Grants 3,327 5,197 11,605 10,938 4,863
Interest on Investments 9,295 8,133 4,944 5,183 704
Other 9,563 9,696 9,170 5,675 8,185
Subtotal Sources of Funds 247,857$ 253,851$ 252,209$ 226,518$ 252,336$
Debt Proceeds 99,158 1,800 44,075 44,000 39,000
Total Sources of Funds 347,015$ 255,651$ 296,284$ 270,518$ 291,336$
Operation & Maintenance Programs:
Raw Water 7,962$ 8,857$ 12,325$ 9,411$ 23,766$
Recycled Water 2,203 2,786 3,517 2,729 3,700
Water Treatment 13,220 15,635 16,972 16,109 18,825
Delivery 16,597 19,824 17,095 18,161 19,983
Conservation 4,722 6,568 9,665 8,741 11,444
Customer Service 6,962 7,968 9,209 10,085 14,862
General Plant 7,447 10,049 9,241 10,514 9,538
Administration 33,251 38,623 36,865 40,422 44,347
Distributed Indirect Costs 40,747 40,789 48,644 52,439 47,450
Total Operation & Maintenance 133,111$ 151,099$ 163,533$ 168,611$ 193,915$
Capital Programs:
Raw Water 22,983$ 25,366$ 33,021$ 23,045$ 38,999$
Recycled Water 20,632 2,695 1,552 702 5,198
Water Treatment 11,375 17,843 12,570 10,019 10,628
Delivery 18,528 13,677 20,077 16,591 24,885
General Plant 9,515 23,216 28,117 18,791 14,415
Total Capital 83,033$ 82,797$ 95,337$ 69,148$ 94,125$
Debt Service:
Debt Service 53,909 49,604 51,933 50,800 50,525
Total Uses of Funds 270,053$ 283,500$ 310,803$ 288,559$ 338,565$
Cash Balance Adjustment* 13,742$
Net Cash Flow $ 76,962 $ (27,849) $ (14,519) $ (4,299) $ (47,229)
Ending Investment Balance $ 226,160 $ 198,311 $ 183,792 $ 194,012 $ 146,783
*Cash Balance Adjustment is required to reflect the Ending Investment Balance due to Accrual Based Expenditures.
Comparison of Sources and Uses of Funds(Thousands of Dollars)
Sources of Funds:
Uses of Funds:
Page 51
Priorities and Issues
Denver Water operates on a cost-of-service basis, a system through which rates are established in
order to reimburse the utility for legitimate costs it encounters in serving customers. In a typical
year we examine priorities, demand forecasts, and financial conditions and then set revenue and
expenditure projections through our 10-year planning process in June. The resulting rates and
expenditures become the basis for the following year’s annual budget, although some small changes
are made in the interim.
Revenue Issues
Weather
Fluctuations in seasonal weather patterns have a significant impact on customer demand for water
and, therefore, on Denver Water’s operating revenues. Although water utilities tend to focus on
drought planning, unusually wet weather can have similar financial impacts and this is what
happened in 2009. Denver Water’s 2009 revenue projections were calculated using a normalized
historical water consumption assumption of 70 billion gallons of treated water. Our actual treated
water demand for 2009 was 61.4 billion gallons and, as a result, revenue from water sales were $23.8
million (11.2%) lower than the budgeted amount. The amount of treated water used by our
customers in 2009 is comparable to the amount used at the height of our most recent drought in
2004.
Due mainly to concerns about the sluggish economy and its impact on our customers’ water
consumption, the Board of Water Commissioners adopted a revised budget in April 2009 that
included a reduction in the operating expense budget. This action, combined with unanticipated
delays in several of our major capital projects, allowed Denver Water to weather reduced revenues in
2009 while adding to our reserves.
As we begin 2010, Denver Water is again concerned about the impact weather may have on our
revenues. As of mid-January, snowpack in Colorado’s mountain river basins was only 79 to 90% of
average. Runoff from melting mountain snows account for the majority of Denver Water’s water
supply. If snowpack and runoff figures are low enough, Denver Water may need to implement
summer watering restrictions, which could result in another year of lower than anticipated revenue.
Although significant winter storms in the mountains can still change the picture, Denver Water is
monitoring the situation closely and will seek to respond nimbly to any further revenue shortfalls in
a way that enables us to operate our system efficiently, meet our system expansion and improvement
needs, and remain financially healthy.
Page 52
The Economy
Denver Water is an enterprise fund operating on an enterprise basis and, therefore, we do not
receive any revenue from taxes. Our revenue vulnerabilities are largely related to water
consumption and not the economic climate. While we face revenue shortfalls in an abnormally wet
or dry year, consumer spending does not impact our revenue.
One aspect of the economy that impacts Denver Water’s revenue projections is housing starts.
Denver Water assesses a fee, known as a System Development Charge (SDC), for new connections to
our system. These fees are used to fund expansion capital. As a result of the slumping housing
market, receipts from SDCs were only 40% of normal in 2009. Based on information from the local
Home Builders Association, we do not anticipate significant improvement in 2010. We have projected
2010 receipts from SDCs to be $8.0 million, a considerable decrease from the $22.0 million we would
expect in a normal housing market.
Expenditure Issues
Capital Expenditures
During the drought of 2002-2004, Denver Water delayed or deferred over $20 million in scheduled
capital projects, resulting in a substantial backlog and increased risk to our system. The 2009
budget delayed an additional $20.0 million in capital spending and unanticipated project delays
resulted in actual expenditures that were $26.0 million below the budgeted amount. The result of
these delays is a “bubble” of capital projects that adds increasing risk to our system as it grows.
In an effort to eliminate the capital project backlog, Staff recommended, and the Board adopted, an
ambitious $1.3 billion 10-year capital expenditure program that includes funds to double our annual
rate of system reinvestment, build out our recycled water and gravel pit storage systems by 2020,
and complete a $226 million project to raise the dam and expand storage capacity at Gross Reservoir.
It is critical to our customers that we keep this capital program on track and not continue to push
projects into later years.
New management strategies have been put into place to ensure these projects stay on schedule to
the extent possible. The new approach includes the addition of an Assistant Chief of Engineering
tasked with keeping projects on track, extensive project management training for project engineers,
and a Capital Program Review (CPR) committee that meets once per month with the objective of
breaking down barriers and improving communication between the Engineering, Operations,
Planning, and Finance Divisions. The results so far have been impressive and the CPR group is
already looking ahead to 2011 to ensure projects scheduled for that year are moving at an
Our revenue vulnerabilities are largely related to
water consumption and not the economic climate.
Page 53
appropriate pace. In fact, several 2011 projects are designed and ready to bid and can be substituted
should any of the 2010 projects run into unanticipated design, permitting or legal issues.
A second year of significant revenue loss would present a major challenge to keeping our 10-year
capital program on track, especially given SDC receipts that are likely to be less than half of normal.
Staff is monitoring the situation on a monthly basis and if the revenue shortfall materializes we will
be prepared to respond accordingly with a larger debt issue or use of cash reserves. Delaying
scheduled capital projects will be the option of last resort.
Operating Expenses
Most of Denver Water’s operating expenses are fixed. In fact, only 7% of our operating costs are
variable. This fact is of special concern when you consider that only 4.4% of our revenues are fixed.
In other words, when revenue is significantly reduced due to low customer demand, we still have to
operate our reservoirs, treatment plants, and distribution systems, read meters and bill customers,
operate computer systems, and process payments and payroll. Therefore, it is not easy to reduce
operating expenses significantly when revenues are down.
Recent circumstances are putting upward pressure on our operating expense budget. For example,
in 2009 we moved from bi-monthly to monthly billing in an effort to give our customers more timely
information about their water consumption. Although this move will benefit our conservation efforts,
it also doubled our meter reading and billing costs. Employee and retiree health care costs are
increasing rapidly, as are costs for security at our outlying facilities. As outlined in the budget
message, a major dredging project to regain lost capacity in Strontia Springs Reservoir will add $8.0
million to the operating budget in 2010, and another $16.8 million in 2011.
Despite these difficulties, Denver Water has made a concerted effort to reduce operating expenses
where possible. In 2009, training, travel, and consultant services were reduced significantly. In
2010, budgets for these items have been increased slightly, but still do not exceed 2008 levels. In an
effort to keep costs low, Staff recommended, and the Board approved, a salary schedule that
eliminated market adjustments for 2010. The Board also adopted major health insurance plan
design changes and premium increases, effective January 1, 2010, which should help contain health
care costs. Staff is also analyzing changes to our retiree medical program that may reduce our Other
Post Employment Benefit (OPEB) liability in the future.
Most of Denver Water’s operating expenses are fixed.
In fact, only 7% of our operating costs are variable.
Page 54
Financial Impact of Conservation
Denver Water is faced with the seemingly contradictory relationship between water conservation
and revenues. Denver Water sets water rates based on the cost of service ratemaking methodology
and, therefore, sets rates to cover the costs of maintaining and operating the water system. The
majority of our operating costs are fixed, and as a result, when water consumption is reduced
revenues fall and rates must be raised to cover costs. Although water conservation will result in
reduced costs for capacity additions in the future, most customers focus on the short-term impacts
and believe they are being punished for conserving water.
This perceived conflict means that, while Denver Water must continue to cover full cost of service
through water rates, we must also be aware of the impact on our customers. As part of this effort,
proposed costs are evaluated each year with a mind toward the resulting rate increases. Through
our Strategic Planning Process we have identified the need to educate our customers on the
importance of water conservation and the future costs that can be avoided if we use water wisely.
Summary Denver Water begins 2010 in a strong financial position with a watchful eye on the weather and the
potential financial impact of another year of revenue shortfall. In the sections that follow, our
revenue projections and budget drivers for 2010 are described in detail.
Our commitment to providing high quality service at the lowest possible rates is reflected throughout
the discussion of revenue and expenditures. The 2010 budget also has strong linkages to our long-
term and strategic planning objectives.
Sources of Funds
Comparison of Sources of Funds 55
Water Rates 56
Comparative Water Bills 57
Types of Water Service 58
Operating (Water Sales) 59
Non-Operating 60
Hydropower 60
System Development Charges 61
Participation\ Reimbursements & Grants 62
Interest on Investments 62
Other 63
Debt Proceeds 63
Gross Reservoir
Owned and Operated by Denver Water
Elevation: 7,225 feet (2,220 meters) – spillway
Capacity: 41,811 acre feet (one acre foot = 325,851 gallons)
Photo by Jackie Shumaker
Photo by Jackie Shumaker
Gross Reservoir
Background
Named for Denver Water former Chief Engineer Dwight D. Gross, the reservoir was completed in 1954. It serves as a combination
storage and regulating facility for water that flows under the Continental Divide through the Moffat Tunnel.
Standing 340 feet above the South Boulder Creek streambed, Gross Dam contains some 627,559 cubic yards of concrete. Gross
Reservoir has a surface area of 440 acres and 10.9 miles of shoreline.
Recreation Opportunities
Overview of available activities
fishing
Cold water fishing; stocked by Colorado Division of Wildlife. Also see Stocking Reports.
ice
fishing
Ice fishing when conditions permit. Denver Water does not monitor ice conditions and those entering the ice should be
aware of changing ice conditions and proceed at their own risk. Check with State Parks.
canoeing
kayaking
Boating is allowed (car-top non-motorized only) from Memorial Day through the end of September. No trailer-hitched
boats are allowed.
Kayak access to the river below Gross Reservoir is available at the parking area below the dam. See map.
picnicking
The east side developed areas are for day use only. Sheltered tables also available.
camping
Limited access. High clearance vehicles required. West side managed by Roosevelt National Forest. Area has seasonal
closure; check with Boulder District.
hiking
Hiking is permitted from North Shore picnic area (trailhead to Rocky Point), South Side Dam, Miramonte picnic area, and
Osprey Point (trailhead), to South Boulder Creek inlet.
Page 55
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
Operating (Water Sales) 194,224$ 204,232$ 212,028$ 188,293$ 223,305$
Non-Operating 2,843 3,140 3,157 2,467 3,482
Hydropower 2,392 4,315 3,305 4,949 3,797
System Development Charges 26,213 19,138 8,000 9,013 8,000
Participation/Reimbursements & Grants 3,327 5,197 11,605 10,938 4,863
Interest on Investments 9,295 8,133 4,944 5,183 704
Other 9,563 9,696 9,170 5,675 8,185
Subtotal Sources 247,857$ 253,851$ 252,209$ 226,518$ 252,336$
Debt Proceeds 99,158 1,800 44,075 44,000 39,000
Total Sources: 347,015$ 255,651$ 296,284$ 270,518$ 291,336$
2007-2010 COMPARISON OF SOURCES OF FUNDS
(In Thousands of Dollars)
The projected sources of funds for Denver Water in 2010 are $291.3 million.
Page 56
Key Issues - Water Rates
Water Rates
The Board of Water Commissioners adjusts water rates annually to adequately recover
the cost of providing service. These costs include operations and maintenance, debt
service and rate financed capital.
Rate Increase
Effective February 2010, Denver Water’s rates will increase. Typical residential
customers will see their bills increase by about $40 a year. Typical suburban residential
customers served by Denver Water will see an increase of $51 per year. The amount of
the bill will vary depending on how much water the customer uses.
Why Is the Rate Increase Necessary?
Our most important responsibility is to ensure our community has a safe and reliable
supply of clean water. Today, we are at a pivotal point. Our distribution system is aging.
Over the long term, demand for water will continue to increase while the supplies to
meet that demand will become increasingly limited. Also, the threat of climate change
creates greater uncertainty with regard to our water supplies, 80 percent of which come
from snow.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009 2010
Incr
ease
in R
evenue
Year
History of Water Rate Revenue Increases
Page 57
Comparative Water Bills
The following table compares Denver’s annual residential water bills with those of the other
independent suppliers in the Denver Metropolitan area for a representative residential customer
based on usage of 130,000 gallons per year. This information is for comparison purposes only.
Rates for Denver Water customers living inside the city remain among the lowest in the metro
area.
$312.88
$319.56
$358.52
$373.87
$395.74
$404.56
$405.44
$407.02
$410.85
$424.99
$434.76
$456.30
$463.28
$470.36
$487.32
$495.08
$496.90
$553.48
$563.40
$570.28
$592.48
$612.53
$628.16
$639.12
$676.80
$761.84
$814.18
$917.66
Pueblo Inside
Louisville Inside
2009 DW Inside
Boulder Inside
South Adams County
2010 Denver Water Inside
Englewood Inside
Arvada Inside
Northglenn
Boulder Outside
Thornton Inside
2009 DW Outside
Broomfield
Pueblo Outside
Westminster Inside
Highlands Ranch
2010 Denver Water Outside
Englewood Outside
Westminster Outside
Golden
Lakewood
Colo. Springs Inside
Glendale
Louisville Outside
Thornton Outside
Aurora
Arvada Outside
Colo. Springs Outside
2009 Front Range Water Bill Comparison130,000 Gallons Annual Consumption
Page 58
Types of Water Service
Water rates are based on four types of retail metered service: Inside City, Outside City Read and
Bill, Outside City Total Service and Master Meter Distributors. Inside City service refers to all
water users inside Denver. Outside City Read and Bill service refers to areas outside the City
where Denver Water is responsible for water delivery to a distributor and for reading meters and
billing customers, while the distributor is responsible for operation and maintenance of the
distribution system. Outside City Total Service refers to areas outside the City where Denver
Water is responsible for water delivery, reading meters, and billing customers, as well as
operation and maintenance of the distribution system.
51% of our Customers live in the City and generate 44% of
water sales revenue.
A variation to the standard “Total Service” Contract is the Total Service Improvement Contract.
Under this contract a Distributor whose system does not currently meet Denver Water
Engineering Standards may request to enter into a “Total Service” Contract that includes special
provisions for Denver Water to take dominion over the Distributor’s existing water system and to
upgrade the Distributor’s water system to meet Denver Water Engineering Standards. A
surcharge is assessed to each of the customers within the Distributor’s service area to pay for the
improvements.
Denver Water also provides wholesale water service to Master Meter Distributors (water
districts outside the City) that own and operate their own water system, perform their own
meter reading and customer billing, and purchase water on a wholesale basis for distribution to
their respective retail customers. Denver Water will bill the Distributor through master meters
at a rate that reflects the cost of providing this additional service. Wholesale water distributors
account for approximately 24% of our revenue from water sales.
49% of our Customers live outside the City and generate 56%
of water sales revenue. (Includes Master Meter Distributors)
Page 59
Operating (Water Sales)
Operating Revenues are generated from the sale of water to customers. In 2010, we anticipate
that 88% of our revenue (not including debt) will result from water sales. The funds are used to
pay normal operation and maintenance costs, replacement of facilities, and plant additions, as
well as debt service.
Operating projections are based on an assumption of total demand for water compared to historic
normal demand. Historically, Denver Water has been able to predict our consumer’s water
consumption patterns with a fair degree of accuracy. However, the recent drought and resulting
change in our customers’ water use has added a degree of uncertainty to our forecasting.
The 2010 forecast of revenues from the sale of water was based on a demand forecast of 70 billion
gallons of treated water. This number is 18.4% below the historical normal demand projection.
The 2010 Budget was reduced for Water Sales Revenue an additional 5% in an effort to mitigate
any impacts the economy or weather may have on our customer’s water use patterns.
$194,224
$204,232
$212,028
$188,293
$223,305
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
OPERATING (Water Sales)(Thousands of Dollars)
2010 Budget for Operating (Water Sales)
Metered Water Sales $155.4 million
Private Fire Protection $1.0 million
Government Water Sales $9.3 million
Master Meter $51.0 million
Non-Potable Water $5.6 million
Non-Potable for Resale $1.0 million
Page 60
Non-Operating
These funds are obtained from payments for services that Denver Water renders such as ditch
assessments, irrigation, main inspections, installation of taps, calculating and mailing sewer
bills, rents on Denver Water facilities and other such services.
Non-Operating cash receipts are estimated based on historical trends. The 2010 budget has
increased as we anticipate larger payments from metro wastewater for sewer billing and
collections.
$2,843 $3,140 $3,157
$2,467
$3,482
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
NON-OPERATING
(Thousands of Dollars)
Hydropower
Denver Water generates hydroelectric power from our facilities at Dillon, Strontia Springs,
Williams Fork and Gross Reservoirs as well as generation facilities at the Roberts Tunnel,
Foothills Treatment Plant and Hillcrest Reservoir. Denver Water enters into agreements with
electric utilities that purchase the generated power.
Projections are based on assumptions of normal weather, and hydrological conditions. Actual
revenues vary depending on precipitation and reservoir levels. In 2010, Hydropower Revenues
will decrease as our Williams Fork facility is taken out of service for upgrades.
$2,392
$4,315
$3,305
$4,949
$3,797
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
HYDROPOWER
(Thousands of Dollars)
2010 Budget for Hydropower
Hydropower $3.8 million
2010 Budget for Non-Operating
Contract Work $1.1 million
Other Non-Operating Income $2.4 million
Page 61
System Development Charges
The System Development Charge (SDC) is a fee received for new connections to Denver Water’s
system. This charge applies to any applicant who is granted a license to take water through
Denver Water’s system or a system deriving its supply from Denver Water. The SDC, first
implemented in 1973, provides a source of funds for expansion capital.
$26,213
$19,138
$8,000 $9,013
$8,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
System Development Charges
(Thousands of Dollars)
The charge is based upon the gross square footage of the single family residential lot or the
number of units in a multi-family building, the size of the connection required, or estimated
volume of water needed.
System Development Charge receipt projections are based on an estimate of the blended average
cost for new taps, the anticipated growth rate for the number of new taps, and any anticipated
rate increases. In calculating the 2010 estimated receipts from System Development Charges,
the Rate Administration Section assumed a .67% growth rate and a 10% increase in SDC
Revenue. In developing the 2010 SDC budget, we reduced the projected amount to the 2009 SDC
budget level in anticipation of a continued slowdown in the construction industry.
2010 Budget for System Development Charges
System Development Charges $8.0 million
Page 62
Participation\Reimbursements & Grants
A participation agreement is one in which a Distributor or Developer pays for a portion of the
costs of the Denver Water distribution facilities such as conduits, treated water reservoirs, or
pump stations required to provide service to that district. Estimates are based on the existence of
contractual obligations.
Reimbursements are compensation received from another entity for money already spent on
collaborative projects. Grants are an award of financial assistance given by the government or
some other organization.
In 2010 we are expecting $1.4 million from Wastewater Management Division for their portion of
cost for the Customer Information System Project and the $2.1 million from South Adams
County for previously completed work on gravel pit storage projects. The 2010 Budget was
reduced by two large one-time payments received in 2009 from Farmers Reservoir & Irrigation
Company and South Adams County Water and Sanitation District related to the Lupton Lakes
property purchase.
$3,327
$5,197
$11,605 $10,938
$4,863
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Participation\Reimbursements & Grants
(Thousands of Dollars)
Interest on Investments
The projection for interest on investments is based on estimates of month-by-month investment
balances and assumptions about prevailing interest rates on authorized investments. Due to the
current low yields on treasury securities and other approved investments, interest in 2010 is
projected to be significantly lower than in 2009.
$9,295
$8,133
$4,944 $5,183
$704
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
INTEREST ON INVESTMENTS
(Thousands of Dollars)
2010 Budget for
Participation\Reimbursements & Grants
Tap Assessments $1.4 million
Wastewater Management $1.4 million
Gravel Pit Storage $2.1 million
2010 Budget Interest on Investments
Interest Income $.7 million
Page 63
Other
Other sources of funds consist of reimbursements for the relocation of mains and hydrants,
proceeds from the sale of surplus assets, employee payments for health and dental insurance,
and minor items not included elsewhere. Projections are based on historical experience and
knowledge of upcoming changes.
$9,563 $9,696 $9,170
$5,675
$8,185
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
OTHER
(Thousands of Dollars)
Debt Proceeds
Bonds are issued in order to build facilities or make improvements to a public property. Denver
Water Board practice is to use debt proceeds to finance expansion capital projects.
Denver Water anticipates issuing $39 million in bonds, but may issue a different amount if
market conditions or construction progress warrant the change.
$99,158
$1,800
$44,075 $44,000 $39,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
DEBT PROCEEDS
(Thousands of Dollars)
2010 Budget for Other
Employee Insurance Collected $1.9 million
Special Assessments $3.8 million
Reimbursements Received $1.4 million
Other $1.0 million
2010 Budget for Debt Proceeds
Debt Proceeds $39.0 million
Uses of Funds
Uses of Funds by Type 64-68
Salaries and Wages 65
Employee Benefits 65
Materials & Supplies 66
Utility & Pumping 66
Professional & Other 67
General Equipment 67
Contract Payments 68
Refunds, Debt and Misc 68
Uses of Funds by Program 69-80
Operations & Maintenance 71-76
Capital 77-80
Williams Fork Reservoir
Owned and Operated by Denver Water
Elevation: 7,814 feet (2,381 meters) – top of dam
Capacity: 96,822 acre feet (one acre foot=325,851 gallons)
Photo by Jackie Shumaker
Williams Fork Reservoir
Background
Completed in 1959, Williams Fork Dam & Power Plant sends water and electricity to the Western Slope when Denver diverts water to the
city elsewhere. Standing 217 feet above the Williams Fork River streambed, the dam backs up a reservoir of nearly 97,000 acre feet of
water, and the power plant contains a 3,158-kilovolt generator. Williams Fork Reservoir's surface area is 1,860 acres with a shoreline of
15.8 miles.
Recreation Opportunities
Overview of available activities
motorboating
Public boat ramp located at the east side campground.
The Reservoir is full at elevation 7811 feet. The boat ramps are unusable for most motorized craft when the water
elevation is 7790' or less.
Most current water elevations at Williams Fork
windsurfing
Windsurfing (sailboarding) permitted with full wet or dry suits.
fishing
Reservoir stocked by Colorado Division of Wildlife (also see stocking reports). Northern pike 26 - 34 inches must be
returned to water immediately.
ice fishing
Ice fishing when conditions permit. Denver Water does not monitor ice conditions and those entering onto the ice
should be aware of changing ice conditions and proceed at their own risk.
camping
The majority of camp sites are set-up for trailer or RV camping. There are some tent camping sites on the
peninsula and east side camping grounds.
hunting: big
game
Big game hunting allowed in the surrounding area, but not within the posted "safety zone" on the northwest side of
the reservoir.
picnicking
The inlet picnic area is for day use ONLY. No overnight camping is permitted on this sit
Page 64
2010 Uses of Funds by Type
The projected Uses of Funds budget for Denver Water in 2010 is $338.6 million. Costs are
displayed in categories by type, regardless of whether the cost is operating or capital.`
Categorizing data this way is useful for trend analysis and for highlighting the impact different
costs have on the budget.
2010 Uses of Funds (In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$270,053 $283,500 $310,803 $288,559 $338,565
Salaries
& Wages,
$75,111
Materials
& Supplies,
$28,212
Utility &
Pumping,
$10,884
Professional &
Other Services,
$50,409
General
Equipment,
$4,965
Contract
Payments,
$76,516
Refunds, Debt
& Misc,
$55,560
Employee
Benefits,
$36,908
2010 Uses of Funds by Type (Thousands of Dollars)
Page 65
Salaries and Wages
Under normal economic conditions, wage and
salary adjustments are based on the annual
market survey. Due to the downturn in the
economy and employment market, Denver
Water will not grant any salary adjustment
for 2010.
Total payroll for 2010 is project at $75.1
million and will support 1,140.8 regular
employees as well as 103.7 full time
temporary positions. The total payroll also
assumes a 4% overall vacancy rate, 1% lower
than the 2009 vacancy rate.
2010 BUDGET: Regular Wages $63.5 million
Overtime Pay $2.3 million Holiday, Vacation, Sick $7.5 million
Other Pay $1.8 million
SALARIES AND WAGES
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$64,833 $68,820 $70,672 $73,875 $75,111
EMPLOYEE BENEFITS
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$28,207 $27,926 $37,078 $39,399 $36,908
2010 BUDGET: Retirement Plan Contribution $13.3 million
Health Insurance$13.0 million All Other Benefits $10.6 million
Employee Benefits
This category of costs covers employee
medical, dental, vision and life insurance, as
well as the defined benefit and defined
contribution retirement programs. FICA,
Medicare, Long Term Disability, and
Worker’s Compensation are also included in
this category.
The decrease in the 2010 Budget is related to
an over funding in the 2009 retirement plan
contribution which will require less funding
in 2010. In addition, more controlled health
costs will be achieved through plan design
changes which will move more costs to the
employee.
Page 66
Materials & Supplies
The 2010 Budget is an increase of $943,000
from the 2009 Budget.
This area includes materials and supplies
purchased for direct use and for warehouse
stock. Office supplies, pipe, sand, and
chemicals fall into this category, as do fuel
and employee safety equipment.
Projected costs in this category have been
trending upward as the prices of steel,
concrete, asphalt, water treatment
chemicals, and other supplies have risen.
Fuel&Oil-Veh&Equip-Nonstores
Mat and Sup Issued from Inven
Fuel&Oil-Veh&Equip-Stores Ord
MATERIALS & SUPPLIES
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$19,557 $26,895 $27,854 $24,876 $28,212
UTILITY & PUMPING
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$6,934 $8,430 $8,812 $7,671 $10,884
2010 BUDGET:
Electricity, Gas, Water & Sewer $5.1 million Communications $2.6 million
Power Purchased for Pumping Water $3.2 million
2010 BUDGET: Materials and Supplies for Direct Use $11.1 million
Chemicals Purchased for Direct Use $5.7 million Store Issues $11.4 million
Utility & Pumping
The 2010 Budget is an increase of $2.1
million from the 2009 Budget.
This category includes power and diesel fuel
for pumping water and our utility bills.
Electricity, gas, water, sewer, telephone and
cellular service are included in this group.
A significant portion of the 2010 Budget
increase in Utility & Pumping is for a
payment to the Federal Energy Regulatory
Commission (FERC) related to the Gross
Dam Hydropower operations. The remaining
increase is related to higher communication
costs, which includes the communication
installation at the Quivas administration
building, and capital improvements in
communication hardware.
Page 67
2010 BUDGET: Professional Services $24.9 million
Other Services $25.5 million
Professional & Other
The 2010 Budget is a decrease of $3.2 million
from the 2009 Budget.
This category includes funds for consultants
with expertise in IT, Engineering, Finance,
Planning and other areas. Labor services
such as those for landscaping, paving,
equipment rentals and temporary
employment are also included in other
services. Employee costs such as travel,
training, conferences and meeting related
costs budgeted are also under other services.
The 2010 Professional & Other Services
Budget was reduced due to the Customer
Information System becoming operational in
2009.
PROFESSIONAL & OTHER
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$37,396 $55,979 $53,573 $52,288 $50,409
$56,943
GENERAL EQUIPMENT
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$2,593 $3,026 $3,615 $3,816 $4,965
General Equipment
The 2010 Budget is an increase of $1.3
million from the 2009 Budget.
General equipment includes communication
equipment, personal computers, hardware
and software, office furniture, laboratory
instruments, garage and shop machines, and
vehicles.
The increase in general equipment for 2010 is
primarily a result of required purchases of
mainframe hardware and system software to
support Phase II of the Customer Information
System and continued operating
requirements.
2010 BUDGET: Vehicles $3.0 million
All Other General Equipment $1.9 million
Page 68
2
68
Contract Payments
The 2010 Budget is an increase of $22.9
million from the 2009 Budget.
This grouping includes construction
contract payments for capital projects, land
and land rights, contract materials and
supplies, land, land rights and water rights
purchases, and construction materials
purchased by contractors.
The increase in contract payments reflect
anticipated system expansion and
reinvestment projects related to the
sedimentation remediation at Strontia
Springs.
CONTRACT PAYMENTS
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$53,959 $37,044 $53,559 $29,870 $76,516
2010 BUDGET: Contract Payments and Construction Materials- $76.4 million
Land, Land Rights and Water Rights $.1 million
Refunds, Debt and Misc
The 2010 Budget is a decrease of $80,000
from the 2009 Budget.
Debt service comprises 91% of the costs
budgeted in this category. The remaining 9%
is made up of conservation incentives,
unemployment insurance and insurance/legal
claims.
The 2010 Budget is not significantly different
from prior years.
RREFUNDS, DEBT AND MISC
(In Thousands of Dollars)
2007 2008 2009 2009 2010
Actual Actual Budget Actual Budget
$56,574 $55,380 $55,640 $56,764 $55,560
2010 BUDGET: Refunds $1.2 million
Debt Service $50.3 million All Other Miscellaneous $4.0 million
Page 69
Uses of Funds by Program
2007
Actual
2008
Actual
2009
Budget
2009
Actual
2010
Budget
30.7% 29.2% 30.7% 24.0% 27.8%
49.3% 53.3% 52.6% 58.4% 57.3%
20.0% 17.5% 16.7% 17.6% 14.9%
Program Budget Costs
Capital O&M Debt Service
Page 70
Operation and Maintenance Programs: 2007 Actuals 2008 Actuals 2009 Budget 2009 Actual 2010 Budget
Raw Water 7,962$ 8,857$ 12,325$ 9,411$ 23,766
Recycled Water 2,203 2,786 3,517 2,729 3,700
Water Treatment 13,220 15,635 16,972 16,109 18,825
Delivery 16,597 19,824 17,095 18,161 19,983
Conservation 4,722 6,568 9,665 8,741 11,444
Customer Service 6,962 7,968 9,209 10,085 14,862
General Plant 7,447 10,049 9,241 10,514 9,538
Administration 33,251 38,623 36,865 40,422 44,347
Distributed Indirect Costs 40,747 40,789 48,644 52,439 47,450
Total Operation and Maintenance 133,111$ 151,099$ 163,533$ 168,611$ 193,915$
Capital Programs:
Raw Water 22,983$ 25,366$ 33,021$ 23,045$ 38,999
Recycled Water 20,632 2,695 1,552 702 5,198
Water Treatment 11,375 17,843 12,570 10,019 10,628
Delivery 18,528 13,677 20,077 16,591 24,885
General Plant 9,515 23,216 28,117 18,791 14,415
Total Capital 83,033$ 82,797$ 95,337$ 69,148$ 94,125$
Debt Service:
Debt Service 53,909$ 49,604$ 51,933$ 50,800$ 50,525$
Total Uses of Funds $ 270,053 $ 283,500 $ 310,803 $ 288,559 $ 338,565
Uses of Funds by Program Summary(Thousands of Dollars)
Page 71
Payroll Costs
Payroll costs are distributed between capital projects and operating activities. The cost of
payroll for employees directly related to the completion of capital projects may be capitalized.
The chart above shows the percentage of payroll allocated between capital and operations.
Of the total amount budgeted for payroll expenditures, 11 percent will be assigned to staff
working with capital projects and 89 percent will be allocated to employees engaged in other
utility activities. The 2010 capital allocation is slightly lower than prior years.
0%
25%
50%
75%
100%
2007 Actual 2008 Actual 2009 Budget 2009 Actual 2010 Budget
86% 86% 85% 87% 89%
14% 14% 13% 13% 11%
Operating and Capital Payroll Distribution
O&M Capital
Page 72
Operations & Maintenance Key Impacts to the 2010 Operating Budget
Strontia Springs Sedimentation Remediation
ERTs Replacement Program
Capital Projects Reclassified as Operating
Move from Bi-Monthly to Monthly Billing
Operations & Maintenance
Operations & Maintenance (O&M) costs are budgeted at $193.9 million for 2010, 18.6 percent
more than the amount budgeted in 2009.
The principal driver of this increase is the beginning of a multi-year project to regain lost
capacity in Strontia Springs Reservoir by dredging sediment from the bottom and pumping it
down Waterton Canyon to the old Kassler facility. The sediment removal from the reservoir is a
result of the 2002 Hayman Fire.
Another key impact in 2010 is Denver Water’s Electric Register Transmitters, ERTs,
Replacement Program. ERTs are part of our auto meter reading program which allows a meter
reader using a handheld or vehicle-based radio device to collect meter readings more efficiently.
Beginning in 2010, this three year program will replace electronic register transmitters with
units that have a longer battery life (around 20 years).
The 2010 Operating Plan contains $1.3 million in projects that were initially identified as capital
expenditures but were reclassified to operating expenses based on general accounting standards.
2007 Actual 2008 Actual 2009 Budget 2009 Actual 2010 Budget
Raw Water 7,962$ 8,857$ 12,325$ 9,411$ 23,766$
Recycled Water 2,203 2,786 3,517 2,729 3,700
Water Treatment 13,220 15,635 16,972 16,109 18,825
Delivery 16,597 19,824 17,095 18,161 19,983
Conservation 4,722 6,568 9,665 8,741 11,444
Customer Service 6,962 7,968 9,209 10,085 14,862
General Plant 7,447 10,049 9,241 10,514 9,538
Administration 33,251 38,623 36,865 40,422 44,347
Distributed Indirect Costs 40,747 40,789 48,644 52,439 47,450
Total O&M 133,111$ 151,099$ 163,533$ 168,611$ 193,915$
(In Thousands of Dollars)
Operations & Maintenance
Page 73
Denver Water moved from bi-monthly to monthly billing beginning in July of 2009. Costs
related to reading meters, printing and mailing bills, and processing payments have increased as
a result. Additional vehicles required for meter reading increase fuel and maintenance costs.
Raw Water
The total 2010 O&M Budget for the Raw Water Program is $23.8 million. This amount
is $11.5 million higher than the 2009 Budget of $12.3 million. The major driver
increasing costs is the Strontia Sedimentation Remediation. The 2010 budget for this
project reflects the procurement of materials needed for the actual dredging project
which begins in 2011.
$0
$5,000
$10,000
$15,000
$20,000
$25,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
ou
san
ds
of
Do
llar
s
Recycled Water
Operating since 2004, Denver Water’s Recycled Water Plant receives wastewater from
the Metro Wastewater facility after its treatment process, treats it and delivers the water
to our industrial and irrigation customers. Long term plans include recycled water
distribution system expansion to meet the needs of our future customers. The 2010 O&M
budget for Recycled Water is $3.7 million based on 3,323 mgd estimate which is $182,742
higher than the 2009 Budget. This increase reflects higher chemical costs, power and
maintenance of the plant.
$0
$1,000
$2,000
$3,000
$4,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
ou
san
ds
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Do
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Recycled Water
Water is a precious resource here in the West, much too precious to use just
once. That’s why Denver Water started a program to treat and recycle
wastewater from the Robert W. Hite Treatment Plant. Once build-out is complete, the
project will supply more than five billion gallons of recycled water every year —
water for irrigation, for industrial use, for lakes in our parks and for golf courses
— water we don’t have to take from a reservoir.
Page 74
Water Treatment
The O&M budget for Water Treatment is developed using a demand estimate of 70,500 mg in
2010. The demand information is used to project chemical costs.
Chemicals comprise 26.7% of the total Water Treatment budget. Actual costs for chemical use
are dependent on water demand. The 2010 budget is $18.8 million which is $1.9 million higher
than the 2009 Budget. The increase in cost is due to higher chemical costs, as well as, the need
to develop as-built drawings for our treatment plants and projects that were planned as capital
and are now classified as operating.
$0
$5,000
$10,000
$15,000
$20,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
ou
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Do
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Delivery
The O&M budget for Delivery of $19.9 million which is $2.8 million higher than the 2009 Budget.
These costs are related to maintaining our pumping and clear water storage facilities, as well as
those for operating our distribution system. Denver Water has 18 treated water pump stations
with a maximum pumping capacity of 1,097.4 mgd. Maintaining our system includes emergency
leak repairs and leak detection in the system. Cost impacts include material prices and utility
costs incurred for pumping operations and materials and other services for pipe and street
repairs.
$0
$5,000
$10,000
$15,000
$20,000
2007
Actual
2008
Actual
2009
Budget
2009
Actual
2010
Budget
Th
ou
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Page 75
Conservation
The Conservation O&M budget for 2010 is $11.4 million, which is $1.8 million higher than the
2009 Budget. Denver Water’s conservation plan involves accelerating the pace of water
conservation in its service area and to reduce overall water use from the 2001 pre-drought usage
by 22% before 2016. This plan is a primary part of Denver Water’s future water supply
planning. In order to provide long-term, reliable supplies for its customers, Denver water
utilizes three strategies: conservation, recycled water and developing new supplies.
Some of Conservation’s efforts include programs such as Education and Outreach whereby
conservation staff visits area schools, providing conservation knowledge to students through
presentations and materials, promoting hands-on student experiences that will bring a deeper
appreciation of water’s importance. Other programs are the Rebates and Incentives which
encourages the public to replace toilets, clothes washers with water efficient products.
$0
$5,000
$10,000
$15,000
2007
Actual
2008
Actual
2009
Budget
2009
Actual
2010
Budget
Th
ou
sa
nd
s o
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Customer Service
The Customer Service 2010 Budget is $14.9 million, which is $5.7 million higher than the 2009
Budget. In April 2010 we will begin a three year project that will replace current ERT’s that
have a battery life of 6 to 10 years with ones that are not only more cost effective but have a 20
year life. Along with reading customer water consumption, Denver Water has moved from a bi-
monthly billing to monthly billing which has increased operating costs. The costs include
reading meters, printing and mailing bills, and processing payments. Also more vehicles are
required for meter reading as well as increase fuel and maintenance costs.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
ou
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Page 76
General Plant
The General Plant program encompasses activities related to the operation and maintenance of
our vehicles, equipment and administrative facilities as well safety, security and small tools.
Cost impacts included increased security at Dillon Dam and preparing the Quivas
Administration building for operations. The 2010 O&M Budget for General Plant is $9.5 million,
$296,942 higher than the 2009 Budget.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
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Administration
The Administration program comprises our overhead costs for administrative activities,
maintenance shops, computer related operation and maintenance, and other related activities.
The 2010 O&M Budget for Administration is $44.3 million, $7.4 million higher than the 2009
Budget. Costs include maintaining our new billing computer system, communication installation
required at the Quivas Administration building, and capital computer system maintenance.
$0$5,000
$10,000$15,000
$20,000$25,000$30,000$35,000$40,000$45,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
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Distributed Indirect Costs
The Distributed Indirect Costs Program contains the employee benefits and general liability and
other insurances. The 2010 O&M Budget is $47.4 million, $1.2 million lower than the 2009
Budget. Budgeted Retirement Plan Contributions will be less than 2009 contributions as a
result of the plan being over funded to offset prior year losses due to poor market performance.
Further anticipated costs reductions are a result of health plan design changes and shifting more
costs to the employee.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2007 Actual
2008 Actual
2009 Budget
2009 Actual
2010 Budget
Th
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Page 77
Major 2010 Capital Projects
The 2010 budget has four projects that are over $5.0 million and account for $36.1 million or
38.4% of the total Capital Improvement Plan.
The Cheesman Reservoir slide gate project is the largest of the four capital projects. Three new
slide gates and a new jet flow will be designed and installed. Additionally, the spillway bridge,
crest and stand-by generator will be replaced along with the updating of the electrical system.
The second largest project, Williams Fork Dam, will replace the outlet works and include a small
hydro plant. The upgraded outlet works will resolve current deficiencies and replace aging
equipment while the hydro plant will have hydropower revenue potential.
Main Improvements, the third project, is a continuous project that allows for the installation of
new pipe for looping, system improvements and replaces obsolete deteriorating pipes.
The fourth project, Marston Plant 2 Improvements, will rebuild plant #2 with new media and
controls to enhance performance and increase capacity to provide better operation.
Capital Improvement Plan
(In Millions)
Year Budget Actual Variance
2007 $ 99.1 $ 83.0 $ (16.1)
2008 $ 87.6 $ 82.8 $ (4.8)
2009 $ 95.3 $ 69.1 $ (26.2)
2010 $ 94.1 $ - $ -
$36.1
$58.0
2010 Capital Improvement Plan
Top 4 Capital Projects All Other Capital Projects
Page 78
2010 Top 10 Capital Projects
Cheesman Reservoir- Design, purchase and install 3 new slide gates and a new jet flow gate.
Replace spillway-bridge, spillway crest, stand-by generator and update dam’s electrical system.
No impact on operating budget.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
$ 397 $ 955 $ 917 $ 15,792
(Thousands of Dollars)
Williams Fork Dam- A new outlet works will be constructed in conjunction with a small hydro
installation. The project is scheduled to be completed in 2012. Operating impacts will be the
potential increase in hydropower revenue.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
323$ 1,783$ 3,467$ 8,867$
(Thousands of Dollars)
Main Replacements- This project includes installation of new mains for looping and other system
improvements. Also includes replacement of deteriorated, obsolete and leaking mains under 24”
in diameter. This is a continuous program. Lower operating costs related to emergency main
breaks, water damage and leaks are anticipated.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
5,801$ 4,932$ 5,720$ 6,422$
(Thousands of Dollars)
Page 79
Marston Plant 2 Improvements - This project involves rebuilding the existing Filter Plant 2 with
new media and controls to allow for enhanced performance, increased capacity, and better
operation. A larger backup generator and housing will also be installed to provide additional
backup power at the plant.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
6$ 1,025$ 6,663$ 5,015$
(Thousands of Dollars)
Conduit and Main Rehabilitation- A continuous program to clean and reline conduits and mains
to restore their carrying capacities, whereby lowering operating costs related to emergency main
breaks, water damage and leaks.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
3,621$ 2,904$ 1,643$ 4,499$
(Thousands of Dollars)
Conduit 302 Stapleton S. to Rocky Mountain Arsenal- This recycled water conduit will be
constructed to provide water to the Rocky Mountain Arsenal. The project is anticipated to be
complete by 2011. No impact on operating budget.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
-$ -$ 128$ 3,209$
(Thousands of Dollars)
Page 80
Decentralization Station at Einfeldt- Includes the construction of an office building and garages
to expand the existing facility. This location allows for immediate access to I-25, University
Boulevard and Colorado Boulevard. Once complete the site will allow Denver Water to increase
crew and equipment for scheduled and emergency dispatching. No impact on operating budget
this year.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
-$ 56$ 274$ 2,222$
(Thousands of Dollars)
Vehicles and Comm. Motor Vehicles– New and replacement vehicles for the fleet. Maintain
levels in the fleet by replacement of deteriorated vehicles.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
1,089$ 1,337$ 1,846$ 1,960$
(Thousands of Dollars)
Gravel Pit- Fulton Ditch Pipeline to Hazeltine PS- Provide a pipeline from the Fulton Ditch to
the Hazeltine Pump Station to allow for the North Metro Gravel Pits to be filled
(Thousands of Dollars)
2007
Actual
2008
Actual
2009
Actual
2010
Budget
$ - $ 100 $ 371 $ 1,922
Customer Information System- Enhance customer care/billing system and business intelligence
tools, improve billing accuracy, enhance customer service, and better understand customer
needs. Operating impacts include costs for staff, postage, fuel and vehicles. These costs are
included in the 2010 operating budget.
2007
Actual
2008
Actual
2009
Actual
2010
Budget
1,277$ 9,648$ 6,743$ 1,570$
(Thousands of Dollars)
Glossary
Acronyms 83-84
Definitions 85-95
Antero Reservoir
Owned and Operated by Denver Water
Elevation: 8,942 feet (2,656 meters) – high water line
Capacity: 19,881 acre feet (1 acre foot = 325,851 gallons)
Photo by Jackie Shumaker
Antero Reservoir
Background
Antero is derived from the Spanish word "first," as it was the first dam on the South Platte River near the river's origin. Antero Dam is
an earth-fill dam built in 1909. Geologists believe the reservoir occupies the site of a former lakebed, probably no more than 300 years
old. Green Lake lies submerged within Antero Reservoir.
Recreation Opportunities
Overview of available activities
motorboating
sailboating
Boating includes boat fishing, sail boating and recreational boating. Boaters must observe the Colorado Boating
Statues and Regulations.
Boat inspections are mandatory for all trailered boats. Inspections occur at the south boat ramp only seven days a
week.
canoeing
kayaking
small water
craft
Portable crafts allowed include kayaks, canoes and inflatable crafts.
The north boat ramp may be used to launch small car top carried boats. No trailered boats allowed at the north boat
ramp.
fishing
Both lake and stream fishing is available.
ice fishing
Ice fishing when conditions permit. Denver Water does not monitor ice conditions and those entering onto the ice should be aware of changing ice conditions and proceed at their own risk.
camping
There are 38 campsites available at the south side campground and boat ramp.
picnicking
The north side area is day use area only, no camping is allowed.
Acronyms A-E
CIP
Capital Improvement Plan
CIS
Customer Information System
CWA
Clean Water Act
DIA
Denver International Airport
DW
Denver Water
EIS
Environmental Impact Statement
EPA
Environmental Protection Agency
ERT
Encoder Receiver Transmitter
ACP
Accelerated Conservation Plan
AF
Acre Foot
AMWA
Association of Metropolitan Water Agencies
BABS
Build American Bonds
BPPI
Budget and Planning Process Improvement
CAFR
Comprehensive annual financial Report
CBSM
Community Based Social Marketing
COP
Certification of Participation
Antero
82
This 1915 photo shows a caretaker standing at the head gate
for a ditch flowing into Antero Reservoir.
NRCS
Natural Resource Conservation Service
NWRS
National Water Resource Association
OPEB
Other Post-Employment Benefits
RCRA
Resource Conservaton and Recovery Act
PACSM
Platte and Colorado simulation Model
POS
Point of Service
SDBE
Small Disadvantaged Business Enterprise
WISE
Water Infrastructure Supply Efficiency
Partnership
WUWC
Western urban Water Coalition
FERC
Federal Regulatory Energy Commission
GAAP
Generally Accepted Accounting Principles
GAD
Gallons Per Account Per Day
GASB
Governmental Accounting Standards Board
GIS
Geographic Information System
G.O. Bonds
General Obligation Bonds
IRP
Integrated Resource Planning
MGD
Millions of Gallons Per Day
NARUC
National Association of Regulatory utility
Commissioners
NEPA
National Environmental Policy Act
83
Accounting Standards
The Board’s financial statements are prepared in accordance with principles generally accepted in the
United States of America (GAAP). Additionally, the Board applies all applicable pronouncements of the
GASB.
Acre Foot
Volume of water equal to one foot in depth covering an area of one acre, or 43,560 cubic feet; approximately
325,851 gallons. Roughly two-thirds of an acre foot serves the needs of a typical family of four for a year.
Annual Yield
Maximum basic demand the water supply could meet throughout a period of historical or synthesized
hydrological conditions.
Average Winter Consumption
The amount of water used on average by a customer during the winter; provides a good indication of indoor
water use.
Balanced Budget
The Denver Board of Water Commissioners has not adopted an official policy on a balanced budget. Our
practice is to balance the budget by the planned use of contribution to investment balances.
Basis of Accounting
The Board’s financial statements are accounted for on the flow of economic resources measurement focus,
using the accrual basis of accounting. Under this method, all assets and liabilities associated with
operations are included on the statement of net assets, revenues are recorded when earned, and expenses
are recorded at the time liabilities are incurred. This is different from the basis of budgeting. The Denver
Water budget is prepared using the modified accrual basis in which revenues are recorded when they
become available and expenditures are recorded at the time liabilities are incurred.
Block
A volume of water used in setting water rates; a quantity or volume of water sold at a particular rate.
Bonds
Debt instruments. According to the Charter, the Board may issue revenue bonds which are secured solely
by it’s revenue. In the past it was able to issue general obligation bonds that were secured by the full faith
and credit of the City of Denver.
Budget
A financial plan for a specified period of time (fiscal year) that assigns resources to each activity in suffi-
cient amounts so as to reasonably expect accomplishment of the objectives in the most cost effective
manner.
DEFINITIONS
A-B
Antero
84
Capital Expenditure
Expenditures having a depreciable life of over one year and a cost of over $5,000.
Capital Improvement Plan
Projects and equipment purchases and provides prioritization, scheduling, and financing options.
Capital Leases
A lease having essentially the same economic consequences as if the lessee had secured a loan and
purchased the leased asset.
Capital Policy
Initial acquisition costs of assets are capitalized if they have a service life of more than one year and a cost
of $5,000 or more. Costs not meeting these criteria are expensed. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the respective asset classes.
Cash Flow Adjustment
The cash flow adjustment is the difference between expenditures as booked and disbursed. Expenditures
are budgeted and reported on a modified accrual basis (as booked). Total expenditures are then converted to
a cash basis (disbursed) for purposes of determining year-end designated balances.
Cash Reserves
The Charter of the City and County of Denver specifically allows the accumulation of reserves “sufficient to
pay for operation, maintenance, reserves, debt service, additions, extensions, and betterments, including
those reasonably required for anticipated growth of the Denver Metropolitan area and to provide for
Denver’s general welfare.” The Board’s practice is to maintain reserves that are sufficient to provide 25% of
the next year’s operating costs, 50% of replacement and equipment purchases, 1 year of debt service, and a
5% self-insurance reserve.
Certificate of Participation
Evidence of assignment of proportionate interests in rights to receive certain revenues pursuant to a lease
purchase agreement.
Chart of Accounts
The Chart of Accounts utilized by Denver Water generally follows the structure presented by the National
Association of Regulatory Utility Commissioners for Class A Water Utilities (NARUC).
Clean Water Act
The federal law that establishes how the United States will restore and maintain the chemical, physical
and biological integrity of the country’s waters (oceans, lakes, streams and rivers, ground water and
wetlands.) The law provides protection for the country’s waters from both point and non-point sources of
pollution.
DEFINITIONS
C
Antero
85
Conduit
A 24-inch (or larger) diameter pipe carrying raw or potable water from or to treatment facilities, reservoirs
and delivery points feeding a distribution system.
Contract Payments
Consists of contract payments for construction, materials purchased for contractor installation, acquisition
of land and land rights and water rights.
Corporate Culture
Values that set a pattern for a company's activities, opinions and actions.
Cost Control Center
A term used to denote a responsibility center. It is an organizational unit that has been placed in charge of
accomplishing certain specified tasks. Example: Water Control Section.
Customer Information System
The multifaceted, multimillion-dollar project to modernize our aging Customer Information System (CIS)
will enhance the system's capabilities, performance, and security. Among numerous other objectives, an up-
to-date CIS will boost our ability to track customer account information, analyze water savings, and
administer more sophisticated rate designs aimed at achieving our demand-management and revenue
goals. A more contemporary CIS will also accommodate the switch from bimonthly to monthly billing.
Debt Guidelines
Denver Water has no legal debt limits. However, the Board has adopted Debt Guidelines to guide the
timing and use of debt in the future. The guidelines set forth a policy that prevents debt proceeds from
being used to pay operating and maintenance expenditures. The guidelines instruct that debt proceeds will
be used only for current refunding, advanced refunding and payment for non-recurring capital projects that
expand the system or are otherwise unusual in nature or amount.
Debt Service
Principal and interest on debt and payments under capital leases.
Demand Side Management
Term used to describe policies aimed at increasing long-term supply by decreasing customer demand for
water, typically through conservation programs.
Direct Materials
Includes materials and supplies purchased for direct use and fuel and oil for vehicles and equipment (non-
stores issues only).
DEFINITIONS
C-D
Antero
86
Disbursements
Money paid out for expenses, liabilities or assets.
Discretionary Employee
The charter of the City and County of Denver allows the Board to establish a classification of employees
who have "executive discretion”, who shall number no more than 2% of all persons employed, and shall
serve solely at the pleasure of the Board.
Division
Largest organizational unit reporting to the Manager.
Employee Benefits
Employee Benefits are expenditures paid by Denver Water for Worker's Compensation, Social Security,
Retirement, Employee Assistance Program, Health and other insurances. It does not include employee
withholdings or unemployment insurance.
EPA Section 319
Environmental Protection Agency Program to provide funds to agencies to assist in clean water protection.
Encoder Receiver Transmitter
An electronic device that receives a signal from a water meter, encodes the current reading into a digital
signal, and transmits it to a meter reader.
Expenditures
In planning expenditures, Denver Water follows the City Charter’s mandate to keep rates as low as good
service will permit. In practice this means that Denver Water will properly maintain its facilities and
continuously seek ways to operate more efficiently.
Fund
An accounting entity with a set of self-balancing accounts that is used to account for financial transactions
for specific activities or government functions. By Charter, Denver Water is reflected in the City’s financial
statement in a single fund-The Water Works Fund.
Fund Balance
The balance in the Water Works Fund. Fund Balance is calculated each year by adding total sources of
funds to the balance at the beginning of the year and then subtracting total expenditures.
DEFINITIONS
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General Equipment
Computer equipment, office furniture and equipment, transportation equipment, storehouse equipment,
construction and maintenance tools and equipment, chemical laboratory equipment, power operated
equipment, communication equipment, garage and shops equipment and miscellaneous equipment.
General Obligation Bonds
A security representing the promise to repay borrowed money secured by the full faith and credit of the
governmental borrower.
Geographic Information System
A component of our Enterprise Asset Management system. This system is used in large part to record the
geographic location and many other attributes of Distribution and Collection system assets. From the GIS,
we produce many types of maps, as well as analysis related to our assets, and the world around them.
Goals
Overall end toward which effort is directed.
Governmental Accounting Standards Board
A board which establishes the generally accepted accounting principles for state and local governmental
units.
Gross Revenue
All income and revenues, from whatever source, including system development charges and participation
payments, excluding only money borrowed and used for providing capital improvements or other revenues
legally restricted to capital expenditures.
Hydropower
Hydroelectric power of/or relating to production of electricity by water power.
Infill
Undeveloped areas within the combined service area that Denver Water would be expected to serve in the
future.
Integrated Resource Planning
A method for looking ahead using environmental, engineering, social, financial and economic
considerations; includes using the same criteria to evaluate both supply and demand options while
involving customers and other stakeholders in the process.
Interest Requirements
As used in the debt guidelines, scheduled interest payments during the 12 month period following the date
of calculation.
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Investment Balance
The total sum held in cash and investments net of uncleared warrants.
Introductory Employee
An employee who is newly appointed to a position and is serving an introductory period, generally of six
month's duration.
Investments
The Board has protection of principal as its primary investment policy objective. The Board designates its
authority to invest monies deposited in the Water Works Fund to the Manager and the Director of Finance.
According to the current investment policy U.S. Government obligations and government sponsored federal
agency securities, commercial paper, corporate fixed income securities, money market funds and repurchase
agreements are permissible investments. The official policy outlines allowable credit risk and maximum
maturities for each investment type.
Lease Payments
Periodic payments made in order to obtain use of a facility or piece of equipment.
Long-Term Debt
Debt with a maturity of more than one year from date reported.
Master Plan
Expenditures identified by projects and activities that are necessary to accomplish the Department's overall
operating goals and objectives. The Master Plan, or Program Budget, is divided into a Capital Work Plan
and an O&M Work Plan.
Master Plan Item
A specific activity or project that is identified in the Master Plan.
Maximo
Maximo (work and maintenance management system) is a component of our Enterprise Asset Management
system, and is used to manage work activities and programs related to operational assets.
Mobile Worforce
Mobile Workforce (the Service Suite system) is a component of our Enterprise Asset Management system
that enables scheduling, dispatching, sharing of work order information and work completion reporting for
our field workers.
Modified Accrual Basis
Accounting method in which basis in which recvenues are budgeted and recorded when received and
expenditures are recorded when incurred, regardless of when payment is made.
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Municipal Water Utilities
Public entities whose responsibility is to deliver water to the customers.
Master Plan
Expenditures identified by projects and activities that are necessary to accomplish the Department's overall
operating goals and objectives. The Master Plan, or Program Budget, is divided into a Capital Work Plan
and an O&M Work Plan.
Master Plan Item
A specific activity or project that is identified in the Master Plan.
Maximo
Maximo (work and maintenance management system) is a component of our Enterprise Asset Management
system, and is used to manage work activities and programs related to operational assets.
Mobile Worforce
Mobile Workforce (the Service Suite system) is a component of our Enterprise Asset Management system
that enables scheduling, dispatching, sharing of work order information and work completion reporting for
our field workers.
Modified Accrual Basis
Accounting method in which basis in which recvenues are budgeted and recorded when received and
expenditures are recorded when incurred, regardless of when payment is made.
Municipal Water Utilities
Public entities whose responsibility is to deliver water to the customers.
Net Revenues
Gross Revenue less Operating and Maintenance Expenses.
Non-Operating Revenue
As used in this document, revenue received from payments for services such as main inspections,
installation of taps, calculating and mailing of sewer bills and other such services.
Non-Potable
Water not suitable for drinking. (See also Potable)
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Objectives
Something toward which effort is directed - an aim, goal or end of action.
Operating Reserves and Restricted Funds
The amount of cash and invested funds available at any point in time. The balance is the Water Works
Fund as defined in this glossary.
Operating Revenue
Revenue obtained from the sale of water.
Operation and Maintenance (O&M) Work Plan
A category of Master Plan items not capital in nature, that are normally ongoing activities and pertain to
the general operations of Denver Water.
Other
Expenditures for items such as payroll deductions, sales tax, insurance claims, cash over and short, and
budget adjustments.
Other Services
Expenditures for items such as training, employee expenses, rents and leases, ditch assessments,
convention and conference expenses, subscriptions, maintenance and repair agreements and memberships.
Participation Agreement
An agreement in which a distributor or developer pays for the cost of the distribution facilities such as
conduits, treated water reservoirs or pump stations required to provide service within that district from the
nearest existing available source.
Potable
Water that does not contain pollution, contamination, objectionable minerals or infective agents and is
considered safe for domestic consumption; drinkable. (See also Nonpotable)
Principal and Interest Requirements
As used in the debt guidelines, interest requirements plus the current portion of long-term debt. (Includes
general obligation bonds, certificates of participation, and capital leases.)
Professional Services
Consists of consultant payments for consultants to provide services such as facility design, legal work and
auditors.
Program
An organized group of activities and the resources to carry them out, aimed at achieving related goals.
DEFINITIONS
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Program Budget
A method of budgeting in which the focus is on the project and activities that are required to accomplish
Denver Water's mission, goals and objectives. It provides for consideration of alternative means to
accomplish these criteria. It also provides a control device for higher level management and cuts across
organizational lines. Resources are allocated along program lines and across organizational lines.
Program Element
Series of smaller categories of activities contained in the program such as raw water, water treatment, etc.
Project Employee
A contract worker assigned to a project of more than one year's duration and receiving a limited benefits
package.
Raw Water
Untreated water.
Recycled Water
Application of appropriately treated effluent to a constructive purpose. In Colorado, the source of recycled
water must be another basin. Also, to intercept – either directly or by exchange – water that would
otherwise return to the sream system for subsequent beneficial use. Sometimes recycled water is called
reclaimed, gray or reuse water.
Refunds
Includes System Development Charge Refunds and Customer Refunds.
Regular Employee
An employee who has satisfactorily completed an introductory period and has been approved by the Board
to receive the rights and privileges of a tenured employee.
Regular Pay
Includes all straight-time salaries and wages earned, leaves, tuition refunds, suggestion awards, swing and
graveyard shift payrolls, and safety equipment allowances. Regular pay consists of all payroll items except
for overtime pay.
Reservoir
An impoundment to collect and store water. Raw water reservoirs impound water in a watershed; terminal
reservoirs collect water where it leaves a watershed to enter the treatment process, and treated-water
reservoirs are tanks or cisterns used to store potable water.
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Revenues
The Denver Water System is completely funded through rates, fees and charges for services provided by
Denver Water. There are no transfers to or from the City’s general fund. Water rates pay for operation and
maintenance expenses, repair, capital replacements and modifications to existing facilities, debt service and
a portion of the costs of new facilities and water supply.
Risk Management
The Board is exposed to various risks of losses including general liability (limited under the Colorado
Governmental Immunity Act to $150,000 per person and $600,000 per occurrence), property damage, and
employee life, medical dental and accident benefits. The Board has a risk-management program that
includes self-insurance for liability, employee medical, dental and vision. The Board carries commercial
property insurance for catastrophic losses including floods, fires, earthquakes and terrorism for scheduled
major facilities.
Safe Drinking Water Act
Federal legislation passed in 1974 that regulates the treatment of water for human consumption and
requires testing for and elimination of contaminants that might be present in the water.
Stores Issues
Includes materials and supplies issued from inventory and fuel and oil for vehicles and equipment
Strategic Plan
Process that is a practical method used by organizations identifying goals and resources that are important
to the long-term well being of its future.
System Development Charges
A one-time connection charge that provides a means for financing a portion of the source of supply, raw
water transmission facilities, treatment plants and backbone treated water transmission facilities required
to provide service to a new customer. Sometimes called a tap fee.
Tap
A physical connection made to a public water distribution system that provides service to an individual
customer.
Temporary Employee
An employee hired as an interim replacement or temporary supplement of the work force. Assignments in
this category can be of limited duration or indefinite duration, but generally do not exceed one year.
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Type of Expenditure
A classification of resources or commodities that will be budgeted and charged to projects and activities by
Cost Control Centers.
Utilities & Pumping
Consists of gas, electric and telephone, electricity wheeling charges, replacement power purchased and
power purchased for pumping.
Warehouse Purchases
Adjustments related to the timing of purchases and issues of warehouse stock. Denver Water maintains a
warehousing operation that purchases materials and supplies into stock. These items are then issued and
charged to jobs as needed. The warehouse purchases and issues adjusment is required to insure that the
total of materials as issued balances to the amount of purchases made for the warehouse stock.
Water Conservation
Obtaining the benefits of water more efficiently, resulting in reduced demand for water. Sometimes called
“end-use efficiency” or “demand management.”
Water Revenues
Revenues generated through billing process from the sale of water.
Water Works Fund
A fund into which are placed all revenues received for the operation of the water works system and plant
together with all monies coming into said fund from other sources. The City Charter creates, the Water
Works Fund, in which all activities of Denver Water are reported in the City’s financial statements. All
revenues and expenditures of Denver Water flow through the Water Works Fund. The balance of the Water
Works Fund is referred to in this budget document as the Designated Balances, Capital and Land Sales
Account.
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Appendix – Debt Guidelines
Page 1 of 2
Denver Water Debt Guidelines as adopted by the Board on May 28, 2003 - Item V-G-4
Denver Water will use the following guidelines to evaluate when and how to use debt financing in the future.
1. Debt proceeds may not be used to pay operating and maintenance expenditures.
2. Debt may be used only for refunding current maturities of existing debt (called current refundings), refunding future maturities of existing debt (called advance refundings) and for capital improvements.
3. Current refundings will be structured so that the final maturity of the debt does not exceed the useful life of
the asset. In addition, refundings will be structured to facilitate an orderly and regular retirement of debt and to comply with statutory regulations while taking advantage of favorable market conditions.
4. Advance refundings will be considered when the net present value savings on the bonds being refunded is
greater than 3.0% and the refunding is permitted by existing statutory regulations; or if extraordinary circumstances exist, when the net present value of savings is sufficient to satisfy existing statutory regulations.
5. Capital improvements of a normal, recurring nature and amount will generally not be financed with debt.
Rather, this type of improvement will be included in the calculation of the revenue requirement from rates. This will result in routine capital expenditures being financed internally on a "pay-as-you-go" basis.
6. Non-recurring capital projects that expand the system or that are otherwise unusual in nature or amount
may be financed externally. Because capital outlays for projects of this type are often made in advance of growth in demand, repayment of debt used to finance such projects may be deferred until revenues begin to be collected.
7. As there is a limited pool of resources, whether from internal sources or from debt, each proposed capital
improvement will be assessed within the context of how it impacts the reliability and integrity of the total system and whether it is consistent with Denver Water’s mission and long-term goals. During the capital planning and budgeting process, projects will be ranked to determine which ones are most essential to meet the Board's overall objectives. Projects that are ranked highest will then be reviewed with respect to appropriateness for external financing. An assessment of the impact on Denver Water’s bond rating given the availability and cost of external financing will be made prior to final approval of the proposed projects for inclusion in the budget and capital plan.
8. Denver Water’s treasury section will monitor the marketplace and stay abreast of new types of financing
instruments and sources of funds. In evaluating the appropriateness of various financing sources for specific projects, Denver Water will consider the expected life of the asset, the nature of covenants, the impact on the organization’s future financial flexibility, the amount of uncertainty and market risk associated with the type of financing being considered, the current regulatory and economic environment and whether revenue and expense projections indicate that Denver Water will be able to support the projected level of debt.
9. Denver Water desires to maintain its stand-alone revenue bond rating at a level or of AA or better. After
consulting with the rating agencies, Denver Water understands that maintaining its actual and historical level of debt service coverage rate of 2.2x or better will be important to maintaining the rating. Merely meeting the covenants contained in the bond resolution is not expected to be adequate. For that reason, the following, more stringent guidelines will be used in financial planning activities:
a. The Debt Ratio should not exceed 40%.
b. Interest Coverage (excluding System Development charges) should be equal to or greater than 2.5x
c. Debt Service Coverage, as defined in the Bond Resolution should be equal to or greater than 2.2x
d. The year-end balance in the Water Works Fund, net of Principal and Interest Requirements for the
next 12 months should be equal to or greater than $5 million.
Page 2 of 2
Calculations
Debt Ratio - Total Debt divided by the sum of net fixed assets plus net working capital. Debt Service Coverage - Net Revenues divided by scheduled principal and interest payments, before any refunding, for the same 12 month period. Interest Coverage - Net Revenues divided by Interest Requirements
Summary of Definitions (for more extensive definition, see Series 2003A Bond Resolution)
Total Debt - The principal amount of long-term debt plus the current portion of long-term debt plus accrued interest payable less the balance in any Debt Service Reserve Funds or Debt Service Funds. (Includes general obligation bonds, certificates of participation, revenue bonds and capital leases.) Gross Revenue – All income and revenues, from whatever source, including system development charges and participation payments, excluding only moneys borrowed and used for providing capital improvements or other receipts legally restricted to capital expenditures. Operating and Maintenance Expenses - Operating and maintenance expenses, net of depreciation, amortization and gross interest expenses, all calculated in accordance with generally accepted accounting principles, for the 12 month period ending on the date of the calculation. Net Revenues - Gross Revenue less Operating and Maintenance Expenses. Interest Requirements - Scheduled interest payments during the 12 month period following the date of calculation. Principal and Interest Requirements - Interest Requirements plus the current portion of long-term debt. (Includes general obligation bonds, certificates of participation, and capital leases.)
Appendix – Financial Policy
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